Tech stocks took a hit on Monday morning as Chinese artificial intelligence firm DeepSeek claimed to have made significant advances in AI development, potentially surpassing U.S. dominance in the field. The Nasdaq Composite fell over 3%, while the Dow and S&P 500 also saw drops. DeepSeek’s open-source AI model, created in just two months for less than $6 million, raised concerns about China’s growing investment and efficiency in AI compared to American tech giants. The company’s app became the top free app in the Apple App Store, surpassing OpenAI’s ChatGPT. Chipmaker Nvidia saw a drastic 18% drop in shares, wiping out over $500 billion in market value. Other semiconductor companies and mega-cap tech firms also experienced losses. Despite export controls on advanced semiconductors to China, DeepSeek’s alleged advancements are being taken seriously, with some expressing skepticism while others acknowledge the potential long-term impact on the industry. Reflexivity president Giuseppe Sette believes DeepSeek’s approach could influence future AI firms by optimizing model efficiency, signaling ongoing surprises in the AI sector in the coming years. Concerns about China’s AI development have also impacted energy companies like Constellation Energy, Vistra Energy, and NRG Energy, as well as equipment manufacturers Siemens Energy and GE Vernova. While doubts remain about DeepSeek’s cost-effective model, its innovations are expected to shape the future of AI development.
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