The emergence of DeepSeek, an open-source AI tool from China, is prompting a reevaluation of AI industry valuations, impacting market sentiment. DeepSeek's ability to perform on par with leading AI models using less computing power challenges the demand for high-end processing resources, potentially compressing revenue margins for major US tech companies. This development has led to a cautious reassessment of AI-driven valuations, particularly in sectors like information technology and manufacturing, which have been buoyed by tech-sector optimism. The market's response reflects concerns over the sustainability of current valuations amid potential technological disruptions.
The SPDR Portfolio S&P 500 ETF (SPLG) experienced a decline, dropping 1.54% to $70.41 at 10:00 AM on Monday, January 27.