The introduction of DeepSeek, a new AI tool from China, is prompting a reevaluation of the AI industry's growth prospects and its impact on tech valuations. DeepSeek's ability to deliver high performance with reduced 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, as investors consider the implications for future growth and profitability in the tech sector. The S&P 500 Index's decline reflects this market sentiment, as the potential for technological disruption raises concerns about inflated valuations and the possibility of a market correction.
The MAX S&P 500 4X Leveraged ETN (SPYU) experienced a significant drop, falling 6.25% to $49.36 at 10:00 AM on Monday, January 27.