Tuya Inc. (TUYA), a leading IoT company, witnessed a significant 6.85% drop in its stock price on Tuesday, February 25th, 2025, closing at $4.62 per share.

The plummet in Tuya's stock price can be attributed to concerns over the company's ability to compete in the rapidly evolving AI industry. According to a report published on Insider Monkey, Tuya's surge in stock price earlier this year was driven by the release of DeepSeek, a powerful AI model developed by a Chinese tech start-up. However, the report suggests that while Tuya has potential, other AI stocks may offer greater returns in the short term.

The report highlights the increasing emphasis on AI technology in China, with President Xi Jinping recently meeting with tech leaders, including Jack Ma, and indicating a more favorable approach towards the sector. This development has fueled investor optimism in Chinese tech stocks, driving the Hang Seng Index up over 15% year-to-date. However, Tuya's focus on IoT and smart solutions may not be the primary beneficiary of the AI boom, leading to concerns about its ability to compete with dedicated AI companies.