US Tech Stocks Plummet Amid AI Model Concerns

The technology sector is currently experiencing significant turbulence, primarily due to a 17% drop in Nvidia's shares following the introduction of the low-cost Chinese AI model, DeepSeek. This decline has raised concerns about the heavy reliance on a small group of companies, dubbed the 'Magnificent Seven,' which are responsible for a substantial portion of the S&P 500’s gains. The S&P 500 fell 1.5%, while the tech-heavy Nasdaq 100 dropped 3%, indicating the outsized influence these stocks have on market performance. Analysts warn that such concentration increases the risk of sell-offs when these companies falter, prompting investors to reassess their portfolios. Despite the downturn in tech, the consumer cyclical sector has shown resilience, with companies like Amazon and Starbucks gaining traction. This mixed market scenario suggests a potential shift towards more stable sectors as investors navigate the evolving landscape.