On Monday, January 27, global technology stocks declined as investors reacted to the rise of a low-cost Chinese artificial intelligence (AI) model DeepSeek. The concern is that this development could challenge the dominance of U.S.-based AI leaders. Astra Worldwide asked some of its partner fund managers for their views regarding this.
DeepSeek’s Disruption
On January 10, 2025, the Chinese startup DeepSeek introduced a free AI assistant in the U.S. market. This assistant, which uses less data and operates at a fraction of the cost of current services, quickly surpassed its U.S. competitor, ChatGPT, in downloads on Apple’s app store. The news caused Nvidia’s stock to drop nearly 17%.
DeepSeek’s emergence could disrupt the AI-driven market narrative that has propelled growth over the past two years. Reduced demand for chips means less need for large-scale data centers, and scaled-back power production could follow. Over the past 18 months, the hype around AI fueled massive capital inflows into equities, driving up valuations.
Interestingly, DeepSeek researchers revealed that their model was trained on less advanced Nvidia chips. This highlights Nvidia’s continued role in the AI industry and suggests potential opportunities for investors to capitalize on its recent dip.
Partner Fund Managers’ Initial Views
We asked some of our partner fund managers for their initial views on the DeepSeek Sparks Global AI Tech Selloff. They are continuing to assess the impact of this recent event. Any significant updates from them will be shared in a follow-up article.”
VAM Funds
- In the short term, the market is concerned about semiconductor demand and U.S. tech companies’ spending on semiconductors. However, in the long term, this development may support scaling by improving cost efficiency in the AI industry.
- The broader impact on AI businesses remains to be seen but it could accelerate progress and adoption.
Guinness Global Innovators Fund
- As a global growth fund, Guinness Global Innovators maintains diversified exposure across sectors, not just technology. This balanced approach mitigates risks during market volatility.
- The Dow Jones index, which gained on January 27th, contrasted with the S&P 500’s decline, so it wasn’t a market wide effect.
- High valuations made tech shares vulnerable to negative news. Earnings reports from major players like Microsoft and Meta Platforms this week may provide additional clarity.
Why Astra Worldwide is One Step Ahead and You Should Not Worry
At Astra, we view the recent tech selloff as an opportunity to invest in high-quality technology stocks at lower prices. We still see AI Innovation as part of global megatrends that will greatly affect the investment environment in the years to come. This is why diversification and active management are vital to navigating volatility, as demonstrated by our approach to portfolio management.
Our diversified and actively managed model portfolios demonstrated resilience on January 27, 2024. Across three risk profiles—Cautious, Balanced, and Growth—losses ranged only from -1.12% to -2.17%, compared to the NASDAQ 100’s -2.97% decline. So, you should not worry about the sell-off because your investments are diversified already.
As of this writing, markets have rebounded a bit. Technology stocks were ready for a bit of a sell-off because of high valuation, and this news provided the right excuse for it. The good news is that investors are now cautiously returning. We believe this presents a strong opportunity to invest with Astra and capitalize on market recovery.
If you want a financial advisor who focuses on growth and protects your investments, contact Astra today. Learn more about our active management and diversification strategies to help you reach your financial goals by checking more on our website and reaching out to us.
Reach out to your Astra Worldwide international financial advisor for investment consultation today.
Looking for an international financial advisor? At Astra Worldwide, we provide comprehensive global financial management services. Visit www.astraworldwide.com to learn more and connect with our international financial advisors.
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