Opinion Today: The Nvidia rout is only the beginning

In the tech economy, low expectations could lead to unexpected results.

View in browser|nytimes.com January 29, 2025 By Suein Hwang Business, Economics and Technology Editor, Opinion When the markets lost a stunning $1 trillion of value on Monday, as many economic commentators and analysts were making sense of the news in more conventional ways, Mihir Desai raised the image of the ouroboros: the ancient motif of a serpent eating its own tail. Bear with me, for where this leads has implications for the future of artificial intelligence and, very possibly, your retirement portfolio. What Desai, a Harvard Business School and Harvard Law School professor, believes is that investors are flooding the "Magnificent 7" — the tech giants whose valuations currently make up over 30 percent of the market capitalization of the S&P 500 — with cheap money, making it easy for these firms to pour capital into investments without worrying about getting a lot back quickly. And what these companies seem to be doing is pouring a lot of that money into one another. Together, they are eating their own tail. If their investments "are guided by extremely low investor expectations, they may well eventually yield correspondingly low returns. And that gives us a possible glimpse into what lies ahead," Desai writes in his guest essay. "Rather than a boom that expands still further to a speculative bubble or a rally for the remaining Unmagnificent 493, we may just witness a slow grind of low returns on excessive spending on a technological future that will not be nearly as revolutionary or imminent as promised." Read the guest essay: Photo Illustration by Maria Mavropoulou Guest Essay I Study Financial Markets. The Nvidia Rout Is Only the Start. Nvidia's sharp turn of fortunes illustrates much deeper problems that investors are ignoring as they send the valuations of Big Tech to the heavens. By Mihir A. Desai Here's what we're focusing on today: Editors' Picks Guest Essay Trump Is Making It Very Hard to Be a Government Whistle-Blower The dismissal of government inspectors general will make it difficult to root out waste and corruption. By Mark S. Zaid and Andrew P. Bakaj More From Opinion Jamelle Bouie If All This Sounds Delusional, That's Because It Is All the king's men is back with a vengeance. By Jamelle Bouie Guest Essay In Trump's Economy, Trump Gets to Pick the Winners and Losers Call it command capitalism. By Tim Wu Bret Stephens D.E.I. Will Not Be Missed The Pentagon's experience shows why. By Bret Stephens Guest Essay Trump's Plans Are Already Making Your Life More Expensive Fears of inflation and more debt are already making borrowing more expensive. By Rebecca Patterson Guest Essay Corporate Leaders Need to Keep Their Mouths Shut Silence often takes courage. But it can also be a reminder that the business of business is business. By Anthony J. Casey and Tom Ginsburg What It Would Take to Build Trump's Iron Dome Over America It's cheaper, quicker and easier to build missiles and offensive systems than it is to intricately engineer the shield to defeat them. By W.J. Hennigan Doug Mills/The New York Times letters Assessing Trump's 'Wrecking Ball' First Week Readers comment on what one called the "blitzkrieg" of executive orders and actions. Also: The unresponsive patient; a community of centenarians. We hope you've enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Games Here are today's Mini Crossword, Wordle and Spelling Bee. If you're in the mood to play more, find all our games here. Forward this newsletter to friends to share ideas and perspectives that will help inform their lives. They can sign up here. Do you have feedback? Email us at opiniontoday@nytimes.com. If you have questions about your Times account, delivery problems or other issues, visit our Help Page or contact The Times. Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Opinion Today newsletter from The New York Times. To stop receiving Opinion Today, unsubscribe. To opt out of other promotional emails from The Times, including those regarding The Athletic, manage your email settings. To opt out of updates and offers sent from The Athletic, submit a request. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018