The recent launch of the DeepSeek AI platform from China has spurred fears in global tech markets, leading to a substantial sell-off in tech stocks. Its R1 model, open-source and developed at lower costs, threatens the expected AI spending surge. Nvidia experienced a stark decline in stock value, with the broader market also reflecting heavy losses, particularly among major tech companies known as the 'Magnificent Seven'. This concentration of gains among a few stocks has left the market vulnerable to rapid downturns, highlighting potential instability ahead.
Catch up quick: There's a global rout in tech stocks Monday, caused by a panic linked to the new Chinese AI platform DeepSeek.
As of 6am ET, shares of AI chip giant Nvidia were down more than 13% in premarket trading.
The bottom line: The S&P 500's incredible run the last two years has been heavily tied to the Magnificent 7.
In a period of such heavy concentration, what goes up can come down very, very quickly.
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