The emergence of DeepSeek, a new AI tool from China, is prompting a reevaluation of AI-driven valuations, impacting the broader tech sector. 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 US tech companies. This development has led to a cautious reassessment of inflated valuations driven by AI optimism, as investors consider the implications for future growth and profitability. The S&P 500 Index has reflected this sentiment, with a notable decline as market participants adjust their expectations in light of these technological disruptions.
The ProShares Ultra S&P500 (SSO) ETF experienced a decline, dropping 3.10% to $95.98 at 10:00 AM on Monday, January 27.