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(Bloomberg) -- DeepSeek’s emergence roiled markets earlier this week, but investors see limited scope for the Chinese artificial intelligence startup to dent the performance of the Magnificent Seven, the latest Bloomberg Markets Live Pulse survey showed.
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Of the 260 respondents, 88% said the debut of the startup’s latest model — which wiped $784 billion from the S&P 500 on Monday — will have little to no impact on the shares of the US technology behemoths in coming weeks. Few are cutting their exposure to the S&P 500, an index dominated by the massive tech companies. Instead, it will be President Donald Trump’s policies that drive equity volatility this year, according to 59% of participants in a survey conducted from Jan. 28-30.
With the S&P 500’s leadership more concentrated than it has been in over 20 years, investors and strategists have frequently warned that volatility in the handful of megacap names that have pulled indexes higher could hurt broader markets. Monday’s selloff had its share of eye-watering moves, including AI darling Nvidia Corp’s $589 billion drop in market value, the biggest single-day loss of value for any public company in history.
Yet beyond tech stocks, the impact on the broader market was largely contained. The S&P 500’s decline of 1.5% on that day was only the index’s biggest loss in 10 sessions. The benchmark index rose 0.5% on Thursday, paring earlier gains after Trump said he would follow through on threats to impose 25% tariffs on Canada and Mexico on Feb. 1. It has made up most of the ground lost in Monday’s drop.
Disruptors Disrupted
Dethroning the Magnificent Seven won’t be easy, as the companies have been able to build significant competitive moats around their businesses, said Steve Sosnick, chief strategist at Interactive Brokers LLC.
Still, Monday’s selloff reminds Wall Street that “even disruptors are at risk of being disrupted,” he says. “If companies are earning outsized profits, it is inevitable that competitors will arise in hopes of reaping some of those gains.”
Major tech firms reporting earnings this week remain bullish on their competitiveness in the AI race. Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg said 2025 will be a “really big year” for his company’s AI strategy. His comments came after the company unveiled higher-than-estimated capital expenditure last week, raising concerns it would struggle to monetize its AI investments.