Uddrag fra Zerohedge/Marketear:
To DeepSeek sell or not to, that is the question…
This is what we love about the markets – an exciting new theme that has the potential to change narratives. How much will DeepSeek matter, that is the trillion dollar question for the next few days. Below are some reasons why it could be really bad & a few reasons why we do not have to worry that much.
Why we are in deep shit
1 – Already a top 3 app
“DeepSeek R1 is “PhD-level” AI charging $2.19 per million output tokens on the API (versus $60 for OpenAI o1). It sounds like the story is still not being widely discussed in print by the sell-side (which worries some folks, tactically), and a number of folks mentioned they’re concerned this issue is not widely reported/understood, and could increasingly weigh on the AI complex. The fact that DeepSeek is now #3 in Top Free Apps on the iTunes store could justify either take on that view.” (JPM TMT trader)
Source: App store
2 – Matters magnificently much for earnings
The Mag 7 were ~60% of the S&P 500’s 29% return over the past 3 years, despite losing 40% in 2022. They were ~15.6% of sales growth and an INCREDIBLE ~106% of net income growth. Yes, the 493 in the S&P ex the Mag 7 experienced an outright decline in earnings. NVIDIA added more than 25% of the S&P 500’s 29% return over the last 3 years, so nearly half of the Mag 7’s gain. (Christopher Bloomstran)
3 – The bubble analogy is back
The chart shows the recent run of the NDX vs. the tech bubble version of the NDX. Could 2025 be the year we peak? The tech bubble burst because we overbuilt fiber capacity and when sales slowed only some, the estimates came down everywhere. One could argue we have overbuilt GPU and datacenter capacity. All we need is for one of these names to miss by a little on earnings.
Source: Stay Vigilant
4 – Coming for the AI King
Alpha Target ask if there is a “Stage 3” top formation underway in NVDA – the stock that is the most at risk here.
1. Stock up ~15x from 2022 low
2. No gains since June ’24
3. Sellers rejecting June ’24 high
Source: Alpha Target
5 – Grossed up
Overall hedge fund exposure has spiked over the last few days. Gross at five-year high and nets at 96th percentile three-year.
Source: GS Prime
Why it is just a blip-dip
1 – Apple: Already oversold
Chart shows AAPL vs the NDX .. can see the 14 – day RSI of an Apple vs NDX pair is now at ~20, approaching the most oversold this pair has been in the last 5 years (ex 1Q’24).
Source: Peter Callahan
2 – Very favorable positioning & sentiment backdrops in Mag7
Net allocation to the Mag7 now stands at 15.1% of total U.S. net exposure, a sharp decline from the record high of ~21% in June 2024. This marks the lowest level since May 2023 and places it in the 60th percentile on a 5-year lookback.
The group’s aggregate long/short ratio is now 3.09, which ranks in the 5th percentile over the past year and the 8th percentile over the past five years.
“This reflects one of the most favorable positioning and sentiment backdrops we’ve seen for the Mag7 going into earnings reports in quite some time.”
Source: GS trading desk
3 – The markets will love if…
There is always a silver lining…Could be positive for some…
“There will be volatility in the stock market as capital markets absorb all of this information and re-price the values of the Mag7. Tesla is the least exposed, the rest are exposed as a direct function of the amount of CapEx they have publicly announced. Nvidia is the most at risk for obvious reasons. That said, markets will love it if Meta, Microsoft, Google etc can win WITHOUT having to spend $50-80B PER YEAR.” (Chamath Palihapatiya)
