NVIDIA's Fall from Grace

Has the AI Bubble Finally Burst?

The S&P 500 and Nasdaq 100 were able to claw back from Monday’s DeepSeek rout to finish the week mostly unchanged, but the response of the magnificent 7 stocks this week paints a pretty mixed picture.

NVIDIA clearly felt the brunt of the pain and its status as AI’s biggest winner translated into making it AI’s biggest loser. The other mega-cap tech names, however, either 1) were able to avoid some of the biggest selling and/or 2) were able to deliver a message that confirmed their big spending plans would still pay off. Despite some troubles in Apple’s quarterly report, especially in China, the market seemed encouraged about its relative lack of AI spending (at least compared to its peers) and optimistic tone around Apple Intelligence. Apple gained 8% on the week. Facebook delivered a strong revenue growth story and its stock was also up 8%. Microsoft’s quarterly report wasn’t nearly as well received, but the point remains is that the damage in the tech space seems much more selective than broad-based.

After the initial DeepSeek reaction died down, corporations and the government went on offense. The U.S. Navy has already banned the use of DeepSeek and it sounds like the government is already considering ways to block its widespread usage in the United States. The overall current tone seems to be viewing DeepSeek as an annoyance more than a threat. We’ll know more in time about whether it can become a true global competitor in the AI space or if it’s just a passing fad.