‘The Black Swan’ author warns future selloffs could be 2-3 times worse than the DeepSeek shock as it reveals how fragile the economy is

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• Market analysts are cautioning that an even more severe downturn is expected now, echoing the sharp decline following the unveiling of the AI technology from DeepSeek.

The sudden decline in Nvidia's stock value due to investors' uncertainty about the performance of a new AI technology called DeepSeek serves as a warning sign of potentially severe financial instability ahead. This stock slide highlights how sensitive and fragile the current economic situation is.

more than 3%.

This raises doubts about the huge sums of money, hundreds of billions of dollars, that are intended for investment in this sector and others.

The start of people's adaptation to reality.

Since OpenAI released ChatGPT in November 2022, kicking off the current AI boom, Nvidia stock has skyrocketed over 700% as demand for its chips has skyrocketed. In the process, it has raised concerns that the overall stock market rally has become too heavily reliant on Nvidia and a select handful of other tech titans.

The history of technology shows that the first innovative idea may not always turn out to be the winning idea, Taleb observed, citing how Google's search engine beat out Alta Vista in the early days of the internet explosion.

When asked if there could be another drop like Monday's, he responded, "or much bigger, or even twice or three times bigger, that's absolutely what you can expect."

The selloff also showed how wealth is made from a relatively short list of stocks and how much of it came specifically from Nvidia, with most of it being accumulated in recent times, Taleb said.

He pointed out just how vulnerable the entire economic system is because of this.

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In October, he said that the environment was eerily similar to conditions seen before past collapses, citing a sense of complacency in the market and the earlier period of low interest rates, which had led people to shy away from more conservative investments.

This article was originally published elsewhere.