Summary
Global tech stocks plunged after the launch of DeepSeek, a low-cost AI model by Chinese startup DeepSeek, sparked investor concerns over the dominance and valuation of AI giants like Nvidia.
Nvidia shares fell 17%, wiping $593 billion in market value—the largest single-day loss for any company.
The selloff impacted chipmakers, AI firms, and datacenter companies globally.
Analysts view DeepSeek’s cost-efficient model as intensifying competition, potentially challenging U.S. tech dominance.
I don’t see a problem. Index funds are precisely there to follow over and underevaluations, so that in the end the best mix gets out, tracking long term real value.
This also means, that the ones who got to sell at the high price get to reinvest that money somewhere else, which in a broad index fund, leads to increases in another place.
However this shows again that it is fatal to think of the market price as being an indicator for a companies worth. The market price only reflects the value of the currently sold stocks. If a large amount of stocks would be pushed onto the market or pulled from it, the price naturally goes up and down. But it is impossible to buy or sell an entire company at the current market price.
The sooner we stop basing economic decisions on the idea that the market price reflects the market cap and that would reflect the actual worth of a company, the less likely we would run into stupid decisions based on bubbles.