The largest tech firms in the US faced challenges from Chinese AI company DeepSeek, but were able to deliver strong results, leading to new highs in the S&P 500. Despite the performance of the "Magnificent Seven" tech giants (Microsoft, Amazon, Alphabet, and Tesla) being mixed, they still had strong ownership from shareholders. Investors are now looking for outperformance from the other companies in the S&P 500. Earnings have been positive so far, with the tech sector expected to see profit growth of 26% for Q4, though this is a deceleration compared to previous quarters. Meta CEO Mark Zuckerberg's reassurances about their AI strategy led to a 6.4% increase in the company's stock. However, Microsoft shares fell due to slower-than-expected growth in their cloud computing business. The emergence of DeepSeek and disappointing earnings reports from AI infrastructure stocks caused setbacks in the sector, with Nvidia shares falling 16%. Some investors have sold AI infrastructure stocks due to the risk posed by DeepSeek. The tech giants are now under pressure to show returns on their AI investments given their high valuations.



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