The emergence of DeepSeek, a new AI tool from China, is prompting a reevaluation of the AI industry's growth prospects, impacting market sentiment. DeepSeek's ability to deliver high performance with less computing power challenges the demand for high-end processing resources, potentially compressing revenue margins for major tech companies. This development has led to a cautious reassessment of AI-driven valuations, particularly affecting sectors like information technology and manufacturing. The S&P 500 Index's decline reflects investor concerns about the future growth and profitability of the tech sector amid these technological disruptions.
The Direxion Daily S&P 500 Bull 3X Shares (SPXL) experienced a significant drop, falling 4.58% to $177.47 at 10:00 AM on Monday, January 27.