The Chinese Ki Startup Deepseek put the tech world into turmoil last week with its new model Deepseek-R1 and illustrated the risk of dependence on the market on a few large tech titles.
• Deepseek ensures stock exchange quakes
• Great dependence on megacap shares
• Analysts see the risk of further correction on the US stock market
Reports on the performance and cost efficiency of the new AI model from Deepseek aroused investors with regard to the reviews of large tech companies and caused violent price losses in chip and AI shares worldwide.
Deepseek puts the chip and AI title under pressure
On the Japanese stock exchange, the semiconductor industry suppliers Advantest, Tokyo Electron and the Tech investor Softbank were significantly under pressure. At the German market, stocks such as Aixtron, Siltronic, Suss Microtec, Kontron, Infineon, Siemens and Siemens Energy were among the suffering of the AI thunderstorm.
In the United States alone, Nvidia lost almost $ 600 billion on the stock exchange last Monday after the share went out almost 17 percent deeper. Losses also posted the Broadcom, AMD and Microsoft’s shares.
Dependence on megacap shares
The crash of the US tech companies shows the risk of market dependency from these few megacap shares that have driven the stock market in recent months. Among other things, the hype about artificial intelligence has contributed to the fact that the shares of the Magnificent Seven (Alphabet, Amazon, Apple, Meta Platforms, Micosoft, Nvidia and Tesla) were able to increase.
Due to these profits, companies make up a third of the weighting of the market-wide US index S&P 500 and about 45 percent of the NASDAQ 100. Last year, the Magnificent Seven together ensured more than half of the overall return of the S&P 500. This means that a weakness of this title also has a strong influence on the corresponding indices: the S&P 500 lost after the Deepseek-Ki- Model 1.5 percent, while the technology -based Nasdaq 100 fell 3 percent.
Risk of further correction
“With such a concentration, there is a risk that such sales will lead,” says Marketwatch Chuck Carlson, Managing Director of Horizon Investment Services. “It will surely raise questions how investors position their portfolios.”
Phillip Wool, Chief Research Officer and senior portfolio manager at Rayliant Global Advisors, explains that it is uncertain “how great the threat is that Deepseek represents AI”, but it is “clear that it is a number of correlated and Overcrowded shops that are at risk when the mood tilts “.
The analysts of Capital Economics also see “the risk of further correction on the US stock market” if it turns out that AI models could actually be effectively trained with less high-end calculation than previously assumed, since “this may be the dominant Position of some companies would undermine the rally “.
Turning point?
Tiffany Wade, Senior Portfolio Manager at Columbia Threadneedle Investments, even believes that the deepseek messages “could lead to a relative shift in the management position”, “which could not only affect NVIDIA, but also other areas of the technology industry” and Carlson from Horizon and According to Marketwatch, others ask themselves whether the latest developments could be a “turning point” through which there could be a change in market leadership or a rotation to other areas of the US market.
At the mark, however, there was also talk of the sale could have been an overreaction. Nevertheless, it has once again been shown how dependent on the US market on a few megacap shares.
Editor finance.net
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