The Chinese app DeepSeek, an artificial intelligence app similar to ChatGPT, quickly became the number one app in app stores upon its release to the public. Costing only $5.6 million to build, DeepSeek was significantly cheaper to create compared to other AI apps like ChatGPT, which cost billions of dollars. This cost-effective alternative disrupted the U.S. stock markets, causing the Dow Jones, S&P 500, and Nasdaq to open in negative territory the day DeepSeek was announced.
Bruce Allen, President of Bruce G. Allen Investments, pointed out that DeepSeek’s affordability poses a threat to American AI companies and could potentially impact individuals who have invested in technology companies through retirement savings or index funds. To diversify away from these potentially risky stocks, Allen recommended considering investments in value stocks, dividend stocks, or funds, as well as equal-weighted indexes.
As investors navigate potential uncertainties brought about by the rise of DeepSeek, financial advisors and 401K administrators can play a crucial role in helping individuals make informed decisions about their investments. With the suggestion to explore growth companies beyond traditional technology firms, individuals are encouraged to seek professional advice to align their investment strategies with their financial goals. In light of DeepSeek’s rapid ascent and its implications on the market, it is essential for investors to stay informed and proactive in managing their portfolios.
