MLIV Pulse latest survey "Soothing": DeepSeek finds it hard to weaken the "Seven Giants" of the US stock market

According to the Zhitong Finance APP, earlier this week, U.S. tech stocks, primarily driven by concerns raised by DeepSeek regarding high valuations and massive returns on AI investments, experienced a significant sell-off, with the market capitalization of the S&P 500 evaporating by $784 billion on Monday. Investors began to worry whether the stock prices of large tech companies would face further corrections due to DeepSeek. However, the latest Bloomberg Markets Live Pulse survey shows that investors believe the impact of DeepSeek on the performance of the "seven giants" of U.S. stocks is limited.

In a survey conducted from January 28 to 30 with 260 respondents, 88% indicated that DeepSeek has almost no impact on the stock prices of U.S. tech giants in the coming weeks. Steve Sosnick, Chief Strategist at Interactive Brokers, stated that it is not easy to overturn the "seven giants" of U.S. stocks, as these companies have already established significant competitive moats around their businesses. However, he added that Monday's sell-off serves as a reminder to Wall Street that "even disruptors are at risk of being disrupted; if companies earn huge profits, competitors will inevitably emerge, hoping to get a piece of the pie."

Major tech companies reporting earnings this week remain optimistic about their competitiveness in the AI race. Meta (META.US) CEO Mark Zuckerberg stated that 2025 will be "a very important year" for the company's AI strategy. Before making this statement, the company reported higher-than-expected capital expenditures last week, raising concerns about the monetization of its AI investments. Meanwhile, Microsoft (MSFT.US) indicated that its cloud computing business will continue to grow slowly this quarter as the company works to build enough data centers to meet the demand for its AI products.

The survey revealed that when asked how the emergence of DeepSeek would affect their investments, 63% of respondents stated that they do not plan to change their exposure to the S&P 500 index; more than half of the respondents believe that Monday's stock market plunge was exaggerated.

Additionally, 59% of respondents believe that U.S. President Trump's policies will drive market volatility this year. Respondents indicated that the Trump administration is a greater catalyst for stock market performance this year compared to AI. They also pointed out that Trump's tariff threats remain an unknown factor.

Kevin Gordon, Senior Investment Strategist at Charles Schwab, stated, "We believe that the impact of policies will not be linear but rather more intermittent." He expects that as market-friendly policies such as tax cuts come into play more towards the end of the year, volatility will increase this year.

Value stocks become a new safe haven

This week's sell-off in U.S. tech stocks has given rise to a new alternative investment destination—U.S. value stocks. 39% of respondents indicated that these stocks are their preferred safe haven. In contrast, 23% of respondents chose U.S. Treasury bonds, and 12% favored the U.S. dollar Investors are buying value stocks, including shares of financial companies, healthcare companies, and industrial companies, which are typically more sensitive to economic fluctuations. This has boosted the performance of the Vanguard S&P 500 Value ETF. Data shows that after four consecutive months of poor performance, the ETF outperformed the Vanguard S&P 500 Growth ETF by less than one percentage point in January.

Despite recently experiencing a massive sell-off, respondents remain optimistic about the outlook for U.S. stocks. The median forecast from respondents indicates that they expect the S&P 500 index to climb to 6,500 points by the end of the year, which suggests an upside potential of over 7% compared to Thursday's closing level