DeepSeek AI Debut Wipes $600B Off Nvidia’s Value
Nvidia, an American chip manufacturing company, suffered a 17% decline on Monday, erasing nearly $600bn from its market value. This drop has been attributed to the appearance of the Chinese based company DeepSeek which has presented a generative AI model with similar features to the American ones at a much cheaper price.
DeepSeek states that it created its AI chatbot for a mere $5.6 million, which is far much less than the billions of dollars American tech companies have spent. The chatbot started to receive a lot of attention and became the most popular free app in the Apple’s US App Store.
Global Tech and Stock Markets React
Nvidia’s plunge prompted selling across the tech industry, as the Nasdaq Composite dropped by more than 3%. Other semiconductor companies such as Broadcom and a Dutch company ASML also saw their shares plunge by 17.4% and 6.7% respectively. Constellation Energy, one of the leading companies in energy infrastructure for AI had its stock drop over 20%.
European and Asian markets also followed this trend. Stock market in Frankfurt and Paris finished the day in low, while stock market in London closed on the flat line.Japan’s SoftBank and semiconductor companies Advantest and Tokyo Electron fell by more than 8% in Asia.
AI Sector Faces Rising Global Competition
DeepSeek’s quick adoption has raised concerns from investors worldwide on the credibility of the company. DeepSeek said it is ceasing new user registrations following a wave of cyberattacks, showing that the organization is struggling as a new entrant in the crowded AI market.
This disruption occurs amid the preparation of tech giants like Meta and Microsoft to present their earnings this week, where they might have to discuss the influence of DeepSeek. The development is a critical event in the technological battle for AI advancement, with China emerging as a growing threat to the US in this area.
