AI and its market impact

The technology sector has been the main market driver in recent years, fuelled by advances in artificial intelligence (AI) and growing investor interest. The technology boom has been noticeable on the Nasdaq 100, the North American technology index, where the big seven tech giants (Alphabet, Apple, Microsoft, Meta, etc.), all heavily linked to AI, have had a strong influence. In particular, Nvidia has consolidated its position as the major beneficiary of this upturn, with record returns of 239% and 171% in 2023 and 2024.

DeepSeek: China's AI earthquake

Recently, DeepSeek, a new Chinese artificial intelligence, has shaken up the markets. This company has managed to develop an AI model capable of competing directly with the US giants, offering unprecedented efficiency and low costs. The app quickly became the most downloaded app in the US App Store, triggering alarm bells on Wall Street. As a result, the Nasdaq 100 fell 3.07% on 27 January and Nvidia shares fell 16.9%, resulting in a loss in market capitalisation of over $600 billion, making it the biggest loss ever recorded.

The Technological Cold War

Rivalry between the United States and China in the technology sector has intensified recently and the arrival of DeepSeek is a new catalyst in the conflict. The hitherto unquestionable solitary leadership of the United States in this key sector, which will determine the future of productivity and global competitiveness, is now being called into question. Accordingly, Donald Trump's US government has announced an investment of $500 billion in AI infrastructure to maintain its technological advantage. Meanwhile, export restrictions on high-performance chips to China have been tightened to hinder the advance of the threat. These geopolitical tensions have fragmented supply chains and created uncertainty in markets. China has also exponentially increased the number of academic publications and patents related to AI, suggesting a clear strategy to achieve technological self-sufficiency.

AI in perspective: risks and opportunities

The new technological structure of AI

The artificial intelligence ecosystem can be understood as a structure formed by several interconnected layers, each with a key role in the development and application of the technology.

Opportunities should be sought across the entire AI ecosystem, focusing on where and when value can be captured.

Source: MoraBanc

AI timeline

We are in the early stages of the AI timeline, with investments focused on building cloud infrastructure. What comes next? Looking ahead, AI is expected to expand into business, proliferate in the consumer app ecosystem, integrate into robotics and drive advances in deep science.

• Infrastructure construction: Currently, investment is focused on cloud computing and data centres, which are essential to support the exponential increase in spending on AI servers.
• Adoption in companies: Over the next two years, AI is expected to be integrated across corporate processes, improving operational efficiency and decision-making.
• Consumer adoption and real-world AI: In the medium term, the proliferation of consumer-oriented AI applications and solutions in sectors such as healthcare, manufacturing, and finance will open up new fields of monetisation.
• Scientific advances and general AI: In the long term, research into deep AI and the possible emergence of artificial general intelligence represent the technological frontier with a potential for growth that is yet to be defined.

The data reveals that the adoption of AI in companies is increasing rapidly, with an increasingly clear focus on specialised models and applications in sectors such as healthcare, manufacturing and finance.

Current valuations

The AI sector is trading at very high price-to-earnings ratios, raising doubts about the sustainability of this trend. History has taught us that many technological revolutions experience a correction before achieving sustained growth. The big question is whether AI will follow the path of the internet or whether it is a more limited trend.

Gartner's Hype Cycle is a model that describes this evolution and adoption of emerging technologies in five key phases. According to the technology consultancy, generative AI is still in the second stage: the peak of inflated expectations, with the risk of imminent disappointment before its consolidation into practical and profitable applications.

On the other hand, BlackRock, the world's largest asset manager, believes that, compared to other historical moments, current valuations are reasonable and are supported by the potential growth derived from AI that has not yet been fully reflected.

Source: Gartner

Opportunities in the accelerated computing supply chain include:

• Chip designers and manufacturers.
• Memory and storage solutions.
• Advanced packaging.
• Network equipment and cooling and energy solutions for data centres.

Soource: BlackRock