DeepSeek Buzz Puts Tech Stocks on Track for $1 Trillion Wipeout
Zettelkasten Automated Post
Chinese artificial intelligence startup DeepSeek’s latest AI model has rattled global technology stocks, including those of chip-makers like Nvidia Corp. This budget-friendly model can function on less advanced chips, creating doubts about the value of companies that have been driving the AI stock boom with high-end chips. The announcement of the cost-effective model led to a 10% drop in Nvidia’s shares and overall, the market experienced a wipeout of approximately $1 trillion in capitalisation. The model is lauded as competitive with OpenAI and Meta Platforms Inc.’s latest offerings and has been praised for its transparency. DeepSeek’s success has boosted Chinese AI-related stocks while causing a slump in AI trades elsewhere.
Investor confidence in AI-specific expenditure, especially by Silicon Valley companies, is affected as DeepSeek’s model challenges their approach to AI. The product reveals that it is now possible to develop cheaper AI models, potentially derailing investment in the AI supply chain. Upcoming earnings reports from major tech players like Apple and Microsoft Corp. will be critical in evaluating the impact of this industry shakeup. The launch of DeepSeek’s product has also challenged the belief that China’s AI technology lags behind that of the US, intensifying competition in the AI landscape.
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