China's DeepSeek AI disrupts U.S. tech just as NASDAQ 100 turns 40

The video celebrates the 40th anniversary of the NASDAQ 100 index, highlighting its strong historical performance and the recent launch of a cost-effective AI model by China’s DeepSeek, which raises concerns for major U.S. tech companies. It discusses the implications of this development for innovation and investment strategies, emphasizing the importance of diversification amidst concentrated investments in top-performing stocks.

The video discusses the 40th anniversary of the NASDAQ 100 index, which tracks the 100 largest non-financial stocks on the NASDAQ exchange. The NASDAQ 100 has a strong historical performance, averaging a 14.25% compounded yearly return, with a significant portion of its composition being technology stocks. The conversation highlights the recent news about a Chinese firm, DeepSeek, launching an AI model at a lower cost than its U.S. counterparts, raising questions about the implications for major tech companies like NVIDIA and Microsoft, which are heavily represented in the index.

Nelson Griggs, the president of NASDAQ, emphasizes that while the news may have caused a downturn in stock prices, the companies within the NASDAQ 100 are known for their innovation and resilience. He suggests that lower capital expenditures could actually benefit the AI sector by making it more accessible for companies to adopt AI technologies. The discussion also touches on the adaptability of these tech firms in navigating challenges, given their historical track record.

Todd S, head of ETFs for Strategus, elaborates on the success of the NASDAQ 100 and its associated ETFs, particularly the Invesco QQQ, which has become one of the largest ETFs in the U.S. The video notes that there are currently 94 ETFs tracking the NASDAQ 100 across various strategies, allowing investors to access the index in multiple ways. The popularity of the NASDAQ 100 is attributed to its strong performance and the diverse range of investment products available, catering to different investor needs and risk appetites.

The conversation also addresses the growing trend of concentrated investments in the largest companies within the NASDAQ 100, raising concerns about potential risks associated with such concentration. While some investors may prefer to focus on the top-performing stocks, there is a recognition of the importance of diversification. The speakers highlight the educational efforts by ETF providers to inform investors about the risks and benefits of different investment strategies.

Finally, the discussion touches on the future of the NASDAQ 100 and the emergence of new companies that could potentially join the index. The NextGen 100 ETF is mentioned as a way to invest in the next wave of large-cap companies that are not yet part of the NASDAQ 100. The video concludes with a reflection on the ongoing evolution of the tech sector and the importance of staying informed about market trends and investment opportunities.