Analysis: Kimi triggers Wall Street’s “second DeepSeek shock” concerns, with funds flowing out of overvalued tech stocks

DeepChao TechFlow news: On July 19, according to The Wall Street Journal, after Mysterious Darkside released its low-cost, high-performance large model Kimi K3, concerns about a “DeepSeek-style shock” resurfaced in the market, putting selling pressure on the AI chip sector. Morgan Stanley said the market could see a similar jolt to the AI-industry turbulence triggered by DeepSeek in early 2025—namely, the rise of low-cost, high-performance AI models may pose challenges for U.S. top model developers such as OpenAI and Anthropic, while also weakening demand for large-scale compute infrastructure that underpins the U.S. AI investment boom.

Nationwide’s chief market strategist Mark Hackett said that retail and institutional investors had previously held positions in momentum-style tech stocks that were clearly too high. Now, capital is flowing out of these overvalued tech stocks, and the semiconductor sector may be affected by rotation of market funds. Investors recently have been reducing allocations to AI-related technology stocks and shifting toward sectors such as energy, financials, industrials, and healthcare.