Tech Stocks Plunge as DeepSeek, a Chinese AI Startup, Raises Concerns
Overview:
Tech stocks plummeted on Monday amid investor concerns over DeepSeek, a Chinese AI startup. The emergence of DeepSeek has challenged the dominance of major US tech players and raised doubts about the sustainability of massive AI investments.
Market Impact:
* Nasdaq 100: Down 3.6%
* S&P 500: Down 2.3%
* Dow Jones Industrial Average: Down 398 points
Top Decliners:
* Nvidia: -18%
* Broadcom: -18%
* Taiwan Semiconductor: -15%
* Microsoft: -5%
* Amazon: -4%
* Alphabet: -4%
DeepSeek's Impact:
DeepSeek's AI model, which was trained on lower-quality chips, has raised questions about the need for excessive AI spending. Investors are now weighing the potential threat to the dominance of US tech companies.
Market Jitters:
The DeepSeek sell-off has amplified market jitters, as excessive valuations and heightened investor nerves combine to create a volatile environment.
Analyst Perspectives:
* David Bahnsen, Chief Investment Officer, Bahnsen Group: "Excessive valuation becomes a heightened problem when combined with fundamental news."
* Jeff Kilburg, CEO, KKM Financial: "This could be the pin that pops the Mag Seven bubble."
Industry Outlook:
Despite the sell-off, some remain optimistic that DeepSeek could spur innovation and competitiveness in the US tech sector.
* Nancy Tengler, Chief Investment Officer, Laffer Tengler Investments: "These companies have deep pockets and talent."
* Satya Nadella, CEO, Microsoft: "As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can't get enough of."