Goldman Sachs: DeepSeek is sounding the "alarm bell" for US stocks

DeepSeek triggers market volatility, Goldman Sachs advises investors to diversify their allocations.

Recently, the breakthrough progress of the artificial intelligence company DeepSeek has caused market fluctuations. Peter Oppenheimer, a market strategist at Goldman Sachs Group, and his team believe in their latest report that this serves as a "wake-up call" for investors to reassess their investment strategies.

Goldman Sachs stated that in a soft landing scenario for the U.S. economy, with declining inflation and falling interest rates, coupled with the high concentration and elevated valuations in the U.S. technology sector, the market is susceptible to turmoil due to disappointment. However, bear markets are usually accompanied by downward revisions in earnings expectations, and the likelihood of a U.S. economic recession this year is low.

Therefore, despite the risks, Goldman Sachs remains optimistic about the prospects of the U.S. stock market and advises investors to respond to potential market volatility through diversified allocations.

Goldman Sachs indicated that DeepSeek's breakthrough has raised concerns in the market regarding the commercialization of AI technology, specifically:

1. High-quality language models may no longer require massive investments;
2. AI supply may not be a winner-takes-all competition;
3. Chinese open-source AI technology challenges the U.S. dominance in this field.

In this regard, Goldman Sachs believes that DeepSeek's breakthrough is a "wake-up call" that highlights the rising concentration risk in the market. However, despite the risks, Goldman Sachs does not recommend selling stocks but instead proposes the following diversified investment strategies:

1. Increase holdings in U.S. Treasuries;
2. Consider equal-weight U.S. index funds;
3. Focus on global growth companies outside the technology sector