The reason behind the significant turbulence caused by DeepSeek’s AI model runs deepIt lies fundamentally in its ability to achieve performance levels akin to those of ChatGPT at a much lower costHistorically, Silicon Valley’s technology giants have maintained seemingly insurmountable competitive barriers through immense computational power and R&D investments, firmly entrenching the belief that “computational supremacy” is paramount

Advertisements

The success of DeepSeek has upended this traditional perception, emerging as a sharp sword that challenges longstanding industry normsThis development has prompted a reevaluation of the investment logic underlying tech stocksInvestors have typically assigned high valuations to these firms based on their robust technological capabilities and substantial capital investmentsHowever, DeepSeek’s emergence indicates that technological barriers can be breachedThis groundbreaking innovation has led investors to profoundly reconsider the elevated valuations of technology stocks while prompting concerns regarding the future competitive landscape of the tech sector.

In the wake of this upheaval, chip giant NVIDIA found itself at the forefront, facing a substantial drop in its stock priceAs a core supplier of computational power for artificial intelligence, NVIDIA holds a pivotal position in the ongoing AI revolution, with its performance intricately linked to the rise and fall of tech stocksWith the ascent of DeepSeek, the market has begun to question whether the historically high valuations of tech stocks can continue to support future earnings growthThe emergence of new competitors threatens to disrupt traditional market share allocations, thereby potentially impacting corporate profitability.

Despite the proliferation of concerns about the tech sector’s outlook, Goldman Sachs has adopted a calm and rational perspectiveOppenheimer emphasizes that the current sell-off is primarily a short-term market sentiment fluctuation rather than a reflection of deteriorating economic fundamentalsHe meticulously analyzes that the U.S. economy remains on a recovery path, with corporate earnings growth staying robust

Advertisements

Particularly within the technology sector, its core status remains unshaken amidst the broader trend of digital transformationMacro-economic indicators reflect stable GDP growth in the U.S. alongside a healthy labor market, which collectively provides support for ongoing economic developmentInternally, the tech industry continues to showcase vibrancy and activity in innovation, with new technologies and applications continually emergingThis leads Goldman Sachs to conclude that the current decline offers a rare entry opportunity for investorsBy buying during periods of low market sentiment and holding for an eventual rebound, they stand to gain substantial returns.

Goldman Sachs’ outlook has garnered support from some market analysts who share similar interpretationsThey argue from varying angles that the market reaction to recent adjustments in tech stocks is a natural consequence of elevated valuations rather than an indication of systemic risk manifestingOver recent years, technology stocks have consistently outperformed other sectors, propelled by emerging technologies like artificial intelligence and cloud computingHowever, the rapid ascension in prices is bound to incur some adjustment pressures, and the DeepSeek incident merely acted as a catalyst for a renewed assessment of tech stock valuations.

The DeepSeek phenomenon reveals not just the risks tied to inflated tech stock valuations but also ignites discussions around the diversification of investment portfoliosHistorically, technology shares have been the “leaders” in the U.S. equity market, attracting significant capital based on their high growth potentialNevertheless, as the volatility in tech stocks increases, investors are becoming acutely aware of the risks associated with concentrating their investments in a single sector

Advertisements

Advertisements

Advertisements