For more than two years, Wall Street has been virtually unstoppable. The Dow Jones Industrial Average , S&P 500 , and Nasdaq Composite have all recently rocketed to record-closing highs and surpassed psychologically important values of 45,000 for the Dow, 6,000 for the S&P 500, and 20,000 for the Nasdaq Composite.
Although the most recent leg higher in equities was driven by Donald Trump’s Election Night victory , the foundational catalyst that’s fueling this upside is the rise of artificial intelligence (AI) . Image source: Getty Images. With AI, software and systems are being empowered to reason, act, and evolve, all without the need for human intervention. The capacity for software and systems to become more proficient at their assigned tasks over time, as well as learn new skills, gives this technology a seemingly limitless long-term ceiling.
However, Wall Street’s DeepSeek scare from last week exposed what’s arguably the biggest flaw of the AI revolution. AI stocks have dominated the investment landscape
Before digging into what riled investors and how the hottest trend on Wall Street may be upended, it’s important to understand how this technology has been a catalyst for America’s most-influential businesses.
For instance, Nvidia (NASDAQ: NVDA) was a $360 billion company when the curtain opened in 2023. Less than two years later, its valuation would peak around $3.7 trillion. This parabolic ascent, which had never been witnessed for a market-leading business, is solely the result of Nvidia’s graphics processing units (GPUs) becoming a staple in high-compute data centers.
Orders for Nvidia’s Hopper (H100) and successor Blackwell GPUs are backlogged, and no other AI-accelerating GPUs are particularly close to matching the computing speed of these chips. This combination of overwhelming demand and AI-GPU scarcity has afforded Nvidia exceptional pricing power and lifted its gross margin into the stratosphere.
It’s somewhat of a similar story for Broadcom (NASDAQ: AVGO), which recently became only the 10th public company traded on U.S. exchanges to reach a nominal $1 trillion market cap. Broadcom’s AI networking solutions are the preferred choice by businesses to maximize the computing potential of their GPUs and (most importantly!) to reduce tail […]
DeepSeek Just Exposed the Biggest Flaw of the Artificial Intelligence (AI) Revolution
