The introduction of DeepSeek, a cost-effective AI solution, is generating optimism in the tech sector by promising to reduce operational expenses for major companies like Microsoft, Meta, and Alphabet. This development is seen as a "positive supply shock," potentially enhancing productivity and efficiency across industries, which could lead to a disinflationary effect by lowering production costs and consumer prices. However, the broader market is grappling with geopolitical uncertainties, such as potential US restrictions on Chinese tech, including DeepSeek, which could cloud the long-term outlook for the global tech sector. Investors are currently weighing these potential benefits against ongoing geopolitical risks, contributing to the market's cautious stance.
The iShares Core S&P 500 ETF (IVV) experienced a decline, dropping 1.66% to $600.74 at 14:20 on Monday, January 27.