I play five-a-side football every week. Last week, our most prolific goal scorer went down early in the match. We all gasped, thinking, how are we going to win now? But football, like investing, isn’t just about one player. The rest of the team stepped up, and we adapted.

In the investment world, chipmaker Nvidia is the superstar striker. Any minor niggle can send waves of concern rippling out among investors.

Last week investors were spooked when Nvidia, which has lifted markets over the past year, faced a new challenge.

AI shake-up: a challenger emerges

A big story in artificial intelligence (AI) sent shockwaves through the tech world. Chinese company DeepSeek has introduced a new AI model it claims performs just as well as the big players but was developed at a fraction of the cost. This could be a game-changer.

It raised questions about companies like Nvidia, whose success relies on selling expensive high-powered chips. Investors asked whether some of the biggest US tech stocks are overvalued. No surprise then, that their share prices wobbled, showing how quickly markets can turn. It’s worth noting though that Nvidia quickly regained some of the lost ground.

The chart below highlights the enormous spending by big companies in the US as they look to invest quickly (hyperscale) in the infrastructure needed to provide artificial intelligence products.

The ‘Magnificent Seven’ and the market’s bench strength

The Magnificent Seven – Nvidia, Apple, Microsoft, Meta, Amazon, Alphabet and Tesla – drove market performance for much of last year. If they don’t deliver, investors will start to worry. But just like in football, it’s not just about the starting line-up – there’s depth on the bench.

Last year, the S&P 500 was up 25%, with the Magnificent 7 responsible for no less than 54% of that gain, while the other 493 stocks in the index contributed 46%. In 2025, we’ve seen the pendulum swing very much in the other direction. So far this year, the seven tech giants have only managed a return of 0.14%*, while the broader index has delivered 3.3% – proof that markets can still thrive even when the superstars take a breather.

Key takeaway: diversification wins matches. The excitement around AI is far from over, but last week’s developments remind us of the risks of putting all your eggs in one basket. Diversification is key in helping to manage risk and stay on track for long-term goals.

By balancing exposure across different parts of the market, we seek to ensure our investors’ portfolios keep working hard – no matter what surprises come our way.

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This article is provided for general information purposes only and should not be construed as personal financial advice to invest in any fund or product. These are the investment manager’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.