Gunjan Banerji
Appearances
The Journal.
How DeepSeek Sank The Stock Market
Yeah, it's funny. I was actually commuting in from Long Island on Monday morning. I was on the Long Island Railroad and I looked at my phone. I was checking my emails, obviously checking the markets.
The Journal.
How DeepSeek Sank The Stock Market
So what traders, people on Wall Street, Silicon Valley was pointing to was this upstart artificial intelligence company, DeepSeek.
The Journal.
How DeepSeek Sank The Stock Market
DeepSeek, this new artificial intelligence competitor, forced everyone involved. to take a look at their portfolios, take a look at their AI products, and really rethink who the winners and losers of this artificial intelligence trade were going to be. All of a sudden, investors were going, hey, are the stocks that we own, is Nvidia, is it worth what we think it's worth?
The Journal.
How DeepSeek Sank The Stock Market
And I see that futures contracts tied to the Nasdaq composite were down more than 4%. which was really an eye-popping move. We had not seen a move of that magnitude in quite some time.
The Journal.
How DeepSeek Sank The Stock Market
I get to my desk and, you know, around the time the market opens at 9.30, I think everyone is kind of glued to their screens at that point. And they see that this really ugly day for the stock market is beginning. All three major indexes are down a bunch. NVIDIA, of course, is down double digits.
The Journal.
How DeepSeek Sank The Stock Market
Basically, investors had latched onto this idea that artificial intelligence was going to unleash this wave of productivity in the economy among U.S. workers and lead to gobs and gobs of profits for a handful of big technology companies, including NVIDIA.
The Journal.
How DeepSeek Sank The Stock Market
Really the big technology stocks. Even think of like Meta, Microsoft, which also has a competitor to ChatGPT. People were thinking of some of these huge technology companies in the US as the key winners from the AI boom.
The Journal.
How DeepSeek Sank The Stock Market
The AI trade completely ate the stock market. It just took over almost every corner of financial markets that you can imagine.
The Journal.
How DeepSeek Sank The Stock Market
Did it feel like a bubble? It's interesting. There has been no shortage of investors the past few years saying, we think this artificial intelligence trade is a bubble. And one of the reasons for that is just the amount of exuberance we've seen surrounding this trade and the levels of speculation. There was a lot of YOLOing out there. You know, you only live once. Let's go for it.
The Journal.
How DeepSeek Sank The Stock Market
This was another flavor of like, let's get really, really rich from trading these AI stocks. Let's pile into their options, which are super risky and can provide kind of these boomer bus returns. Let's pile into really risky exchange traded products. So There was just this mountain of speculation building and building and building while the AI craze continued. But it kept growing.
The Journal.
How DeepSeek Sank The Stock Market
So NVIDIA was down more than 10% shortly after the opening bell. It ended the day down 17%. And just to put that into context, that is a market value loss of almost $600 billion. So much money. Right. That is just an insane amount of wealth and amount of value that evaporated within hours. In fact, it is the biggest one-day market value drop on record.
The Journal.
How DeepSeek Sank The Stock Market
It kept growing and growing and growing. It kept snowballing.
The Journal.
How DeepSeek Sank The Stock Market
I think the deep-seek news really spooked a lot of people about the valuation that they were assigning to some of these technology giants. It was a moment that made people question where they had been putting their money the past two years.
The Journal.
How DeepSeek Sank The Stock Market
The one thing that a lot of investors were fixated on is that it seemed like DeepSeek needed a lot less computing power. So that would mean that the AI models of the future might not require as many high-end NVIDIA chips as investors have been counting on. I mean, the way one investor put it to me was, we've been banking on NVIDIA being the disruptor. Are they being disrupted now?