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The arrival of China’s DeepSeek is fanning concerns among investors over whether US tech stocks deserve their rich valuations.
The drop of more than 10% in the shares of Nvidia Corp. and ASML Holding NV is a sign that many traders are ready to cash out on their winnings rather than wait around to find out. Other investors, like Fares Hendi at French asset manager Prevoir AM, say they’re holding onto their Nvidia shares and waiting for more information about DeepSeek’s technological promise.
“If they really need less chips to make their model run, then yes the threat is real, it would weigh on growth and valuation,” said Hendi. “But at the moment, we’re going to take the time to really look into it.”
The Nasdaq 100 is trading at 27 times projected profits in the next 12 months, almost a quarter above its 10-year average. Nvidia, which has led the way on AI technology, has a valuation multiple of 32.