Nvidia's Plunge Spurs Tech Sell-Off
Amidst concerns over an open-source language model, Nvidia (NVDA) experienced a significant stock decline of 16.9%, eroding nearly $590 billion in market capitalization. This sparked a sell-off in the tech sector, with chip stocks and tech giants like Alphabet (GOOG) and Microsoft (MSFT) facing declines.
Analysts Downplay Panic-Selling
Top analysts believe the sell-off may be overblown. Bernstein's Stacy Rasgon deems the market's reaction "overblown," emphasizing the ongoing need for AI infrastructure. Futurum's Daniel Newman echoes this sentiment, stating that efficient models like DeepSeek will foster AI expansion and reduce expenses for businesses, boosting EPS.
AI Spending Remains Strong
Microsoft CEO Satya Nadella highlights the Jevons Paradox, suggesting that as AI efficiency improves, its adoption will accelerate. Despite the sell-off, spending on AI continues to rise. Wall Street's initial panic subsided as Microsoft and other tech giants closed off session lows.
Macro Environment Remains Constructive
Principal Asset Management's Seema Shah downplays correction concerns, citing a positive macro environment and strong earnings prospects across sectors. She emphasizes that DeepSeek's impact is ultimately beneficial for global productivity and innovation.
Market Performance
The Nasdaq closed down 3% on Monday, while the S&P 500 dropped 1.5%. The Dow Jones Industrial Average reversed earlier losses, ending up 0.65%.