Nvidia Sell-Off Overblown Amid Open-Source AI Concerns
China's DeepSeek AI startup has sparked a tech stock sell-off, causing investors to question the dominance of US AI. Nvidia (NVDA) led the decline, plunging 16.9% and wiping out $589 billion from its market cap.
Ripple Effect Across Tech Sector
The Nasdaq closed down 3%, with chip stocks like Broadcom (AVGO), Lam Research (LRCX), and Marvell (MRVL) falling. Microsoft (MSFT) and Alphabet (GOOGL) dropped 2% and 4%, respectively.
Overreaction to DeepSeek
Analysts believe the market's reaction is excessive. Bernstein's Stacy Rasgon dismisses DeepSeek as a threat to AI infrastructure, arguing that computational needs for AI will continue to grow.
Jevons Paradox and AI Expansion
Futurum's Daniel Newman invokes the Jevons Paradox, suggesting that more efficient AI models will expand AI use. Microsoft CEO Satya Nadella echoes this view, predicting increased AI deployment with greater efficiency.
Wall Street Rebounds
Initial panic subsided, with Microsoft and other tech giants recovering from session lows. Amazon and Meta closed the day with gains.
Constructive Market Outlook
Principal Asset Management's Seema Shah downplays correction concerns, citing a strong earnings environment and the potential benefits of DeepSeek for global productivity. The Nasdaq closed down 3%, the S&P 500 down 1.5%, and the Dow Jones up 0.65%.