Chinese AI chatbot DeepSeek sparks turmoil in US tech markets source BBC News.

During the past two years US Technology company giants have ramped higher their commitment to developing Artificial Intelligence programs in a race against competitors. The so called Magnificent 7: Apple, Amazon, Meta, Alphabet, Nvidia, Microsoft and Tesla have surged in price during the past two years as revenues and earnings accelerate as demonstrated in the chart.

DeepSeek’s success results from much smaller expenditures using far less efficient microchips claiming much better results than US competitors – challenging the ultra-expensive approach of US technology giants. During the first day of DeepSeek’ announcement Nvidia alone lost $600 billion of market capitalization.

While extraordinary productivity gains from the benefits to be created by AI are forecast from US technology leaders, the shock created by DeepSeek this past Monday emphasizes the risks associated with earnings expectations not yet achieved.

At Worcester Advisors, we continue to recommend investment in well diversified portfolios of high-quality companies with consistent earnings growth as the safest method of achieving capital growth.

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