The event of Monday at Wall Street was a sharp discount of shares of technology companies related to AI. Investors reacted nervously to the information that the Chinese startup Deepseek developed a competitive model of artificial intelligence for a fraction of billions issued by the Silicon Valley.
Dow Jones Industrial at the closure increased by 0.65 percent, to 44,713.58 points
S&P 500 at the end of the day fell by 1.46 percent. and amounted to 6.012.28 points
Nasdaq Composite lowered by 3.07 percent until 19,341.83 points
The index of companies with medium capitalization Russell 2000 drops by 1.04 percent. up to 2,283.54 points
The VIX variation indicator increases by 20.67 percent. up to 17.92 points
Nervous reactions to a competitor
Startup Deepseek with China He made available a free assistant using artificial intelligence, who, according to the company, uses cheaper integrated circuits and a smaller amount of data, thus undermining the widespread belief in financial markets that artificial intelligence will drive demand in the entire supply chain from manufacturers of integrated circuits for data centers.
“Why are investors concerned? News from the last few months concerned the huge investment outlays of Microsoft, which will spend USD 80 billion in 2025, while the meta has recently announced investments from USD 6 billion to USD 65 billion. With these significant investments in And in USAthe fact that the highly efficient and less capital -intensive AI model from Deepseek has shown such significant innovation and success, prompts investors to think that the investment cycle in AI may be exaggeratedly advertised and it is possible to use resources in the future more efficiently ' – wrote the JPMorgan analyst in the report Sandeep Deshpande.
“Deepseek clearly does not have access to such high computing power as American Big Tech companies, but somehow he managed to develop a model that seems very competitive,” said Srini Pajjuri, an analyst of the semiconductor market at Raymond James.
Deepseek claims that the initial version of its large language model, launched at the end of December, cost less than $ 6 million. Wall Street questions this number, but the startup claims are concerned that large models of artificial intelligence can be built with much smaller investments.
Nvidia, a favorite of a bull market associated with artificial intelligence, fell on Monday over 18 percent. They also firmly reduced, among others Broadcom, AMD, Microsoft, Amazon and Palantir.
– This is a good example that he is selling first and then asking questions. Investors feel that the valuations are slightly stretched in the case of technology in general, and in particular semiconductors – said Stovall himself, the main investment strategist at CFRA Research.
– We will deal with variability, especially when we are dealing with a richly priced market – he added.
On the other hand, rotation in more defensive areas of the market helped to alleviate Monday's losses. – I was also encouraged by the fact that investors do not necessarily withdraw from the campaign, but they rotate in defensive areas, such as basic consumer goods, healthcare, real estate – added Stovall.
“Better mouse trap”?
The noise around artificial intelligence has caused a huge influx of capital on the stock market over the past 18 months, raising valuations to new peaks.
“If it is true that Deepseek is the proverbial 'better mouse trap', this may interfere Wisconsin, cited by Reuters.
“This may mean a lower demand for chips, a lower need for massive expansion of energy production to drive models and lower demand for large data centers. However, this may also mean that artificial intelligence will become more accessible and help in starting the development of a wide range of useful applications” – He added.
On Wednesday, American actions related to artificial intelligence increased after the president Donald Trump He announced an investment plan in infrastructure of artificial intelligence worth $ 500 billion through a joint venture known as Stargate.
Since then, Softbank has announced a commitment of $ 19 billion to help in financing Stargate. Other sponsors of this undertaking are OpenAi and Oracle.
The sale reminds you of risks
The “Financial Times” points out that the current sale in the technology sector caused by progress in the artificial intelligence of the Chinese startup Deepseek reminds about the risks of a concentrated stock market.
Currently, the 10 largest companies are responsible for almost 2/3 of the S & P500 index force. In the “FT” opinion, this concentration has no precedent in modern times.
Investor's investor is waiting for the publication of results for the fourth quarter for a large part of the companies from the “Wonderful Seven” group. Meta, Microsoft, Tesla and Apple will show off their achievements.
Source of the main photo: Shutterstock