The introduction of DeepSeek, an innovative AI tool from China, is causing ripples across the tech sector, particularly impacting companies reliant on high-end processing resources. DeepSeek's ability to deliver performance comparable to leading AI models with reduced computing power is prompting a reevaluation of the demand for advanced chips and the revenue margins of major US tech firms. This development is leading investors to reassess the inflated valuations driven by AI optimism, potentially triggering a market correction. The tech sector, which has been buoyed by high expectations, may face increased volatility as capital markets adjust their growth projections in light of this technological disruption.
The SPDR Portfolio S&P 500 Growth ETF (SPYG) experienced a notable decline, dropping 3.09% to $89.18 at 10:00 AM on Monday, January 27.