By Kristine Aquino and Norah Mulinda

(Bloomberg) — DeepSeek’s emergence roiled markets earlier this week, but investors see limited scope for the Chinese artificial intelligence startup to dent the performance of the Magnificent Seven, the latest Bloomberg Markets Live Pulse survey showed.

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Of the 260 respondents, 88% said the debut of the startup’s latest model — which wiped $784 billion from the S&P 500 (^GSPC) on Monday — will have little to no impact on the shares of the US technology behemoths in coming weeks. Few are cutting their exposure to the S&P 500, an index dominated by the massive tech companies. Instead, it will be President Donald Trump’s policies that drive equity volatility this year, according to 59% of participants in a survey conducted from Jan. 28-30.

With the S&P 500’s leadership more concentrated than it has been in over 20 years, investors and strategists have frequently warned that volatility in the handful of megacap names that have pulled indexes higher could hurt broader markets. Monday’s selloff had its share of eye-watering moves, including AI darling Nvidia Corp’s (NVDA) $589 billion drop in market value, the biggest single-day loss of value for any public company in history.

Yet beyond tech stocks, the impact on the broader market was largely contained. The S&P 500’s decline of 1.5% on that day was only the index’s biggest loss in 10 sessions. The benchmark index rose 0.5% on Thursday, paring earlier gains after Trump said he would follow through on threats to impose 25% tariffs on Canada and Mexico on Feb. 1. It has made up most of the ground lost in Monday’s drop.

Disruptors Disrupted

Dethroning the Magnificent Seven won’t be easy, as the companies have been able to build significant competitive moats around their businesses, said Steve Sosnick, chief strategist at Interactive Brokers LLC.

Still, Monday’s selloff reminds Wall Street that “even disruptors are at risk of being disrupted,” he says. “If companies are earning outsized profits, it is inevitable that competitors will arise in hopes of reaping some of those gains.”

Major tech firms reporting earnings this week remain bullish on their competitiveness in the AI race. Meta Platforms Inc. (META) Chief Executive Officer Mark Zuckerberg said 2025 will be a “really big year” for his company’s AI strategy. His comments came after the company unveiled higher-than-estimated capital expenditure last week, raising concerns it would struggle to monetize its AI investments.

Meanwhile, Microsoft Corp. (MSFT) said its cloud-computing business will continue to grow slowly in the current quarter as the behemoth struggles to build enough data centers to meet demand for its AI products. Nvidia Corp. is scheduled to report results on February 26.

Overblown Reaction

When asked how DeepSeek’s emergence would affect their investments, 63% of survey participants said they have no plans to change their exposure to the S&P 500. More than half said this week’s rout was overblown, given questions over how DeepSeek managed to release an AI model that it claims cost a fraction of what US industry leaders spent on theirs.

With respondents seeing the Trump administration as a bigger catalyst than AI for stock performance this year, Trump’s tarrif threats remain a lingering unknown.

“We do not believe that the impact of policies will be felt linearly but rather more episodically,” said Kevin Gordon, senior investment strategist at Charles Schwab & Co. Nonetheless, the portfolio manager expects elevated volatility this year, with market-friendly policies like taxes and tariff removals loaded more toward the back-end of the year.

New Haven?

This week’s selloff in shares of American tech giants gave rise to a new alternative destination: US value stocks. This sector was the preferred haven for 39% of respondents, compared with 23% who opted for Treasuries or 12% who favored the US dollar.

Investors piled into value shares, which include everything from financial companies to health care and industrials stocks, and are typically more sensitive to economic swings. That has propelled the likes of the Vanguard S&P 500 Value Index Fund ETF, which houses bellwethers like Johnson & Johnson, Procter & Gamble Co. and Coca-Cola Co.

It is edging out its counterpart — the Vanguard S&P 500 Growth Index Fund ETF — by less than a percentage point in January following four straight months of underperformance, according to data compiled by Bloomberg. If that holds through Friday, it would be the widest monthly gap since August.

Survey-takers remain optimistic on the S&P 500, with their median estimate for the benchmark to climb toward 6,500 by year-end — that would represent a 7.1% gain from Thursday’s close.

—With assistance from Jessica Menton.

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