Black Swan author warns of market shock bigger than Nvidia’s crash

Nassim Taleb, author of ‘Black Swan,’ warns investors about the risk of concentrating capital in technology stocks, particularly Nvidia, and warns of a severe shock similar to the one caused by DeepSeek’s AI technology.

Nassim Taleb, the author of ‘Black Swan,’ cautions investors about the risk of concentrating capital in technology equities, pointing specifically to Nvidia. On January 29, 2024, Nassim Nicholas Taleb spoke at a Universa Investments event in Miami where he warned that markets should expect an even more severe shock than the one that sent stocks down after DeepSeek’s AI technology was made public.

The “black swan event” is a major, uncertain worldwide occurrence that, in hindsight, seems all but certain. According to some analysts, DeepSeek’s explosive growth could be a global stock market black swan event that seriously disrupts US tech markets.

Risk expert Taleb highlights market wealth concentration in a few stocks, particularly Nvidia’s trillion-dollar valuation, highlighting the fragility of the economic structure and potential market adjustment.

Taleb’s remarks followed Nvidia’s 17% plunge, which destroyed $589 billion in market capitalization—the largest decline ever for a US company—and caused the Nasdaq to lose more than 3%.

That followed concerns about the hundreds of billions of dollars planned for investment in the industry and elsewhere when DeepSeek developed state-of-the-art AI at a fraction of the price that competitors like OpenAI and Google are investing.

“This is the beginning,” Taleb told Bloomberg TV this week. “The beginning of an adjustment of people to reality.”

Nvidia’s stock has increased by more than 700% since OpenAI’s release of ChatGPT in November 2022, which started the current AI boom, as demand for its processors has skyrocketed. Alarms have been raised in the process that the stock market surge as a whole has become overly reliant on Nvidia and a small number of other tech titans.

When asked if there could be another drawdown like Monday’s, he said, “or much bigger, or two, three times bigger.” That’s exactly what you’d expect.”

“The selloff also demonstrated the fragility of wealth formation from a very small number of stocks, and how much came from Nvidia alone, most of which was recent. It shows us how fragile the whole economic structure is because of that,” Taleb said.

Taleb, a respected scientific advisor at Mark Spitznagel’s Universa Investments, has previously cautioned that markets are more vulnerable than they have been in the last 20 to 30 years.

In October, he stated that the environment was comparable to that of prior crashes, citing market complacency and the earlier age of low interest rates, which taught individuals to avoid prudent investments. In a Bloomberg interview in October 2024, he also said that the markets are very fragile.