Magnificent Seven ETF Falls Amidst Market Concerns and DeepSeek Impact
Concerns Weigh on Magnificent Seven
Concerns over lackluster guidance and plans for substantial capital investment have affected the performance of the Magnificent Seven trade. The Roundhill Magnificent Seven ETF (MAGS) has experienced a decline of 2.4% over the past five trading days. Alphabet (GOOG, GOOGL) and Amazon (AMZN) led the downturn, with respective drops of 9.2% and 3.6%.
DeepSeek's Impact on the Tech Sector
The tech sector continues to recover from the DeepSeek-driven sell-off prompted by investor concerns over a cheaper open-source large language model. However, industry experts and top CEOs view DeepSeek as a catalyst for innovation and adoption in AI.
AI Network Stocks: Potential Beneficiaries
As AI models like DeepSeek's R1 increase compute demand, the demand for high-speed networking solutions will expand. Bank of America's Chun Him Cheung notes that reduced compute costs will likely drive broader AI adoption and robust demand.
Top beneficiaries in this space include Ciena (CIEN), Coherent (COHR), Celestica (CLS), and Arista Networks (ANET). These companies provide infrastructure for AI applications, addressing the bottlenecks in AI infrastructure delivery.
Analyst Recommendations
Morgan Stanley analyst Meta Marshall remains bullish on Arista Networks, citing increased demand due to AI-related data expansion. She maintains an Overweight rating on the stock ahead of its upcoming earnings report.
Conclusion
Despite recent headwinds, the development of DeepSeek is seen as an opportunity for growth in the AI industry. AI network stocks offer compelling investment potential as the demand for high-speed networking infrastructure continues to grow.