Investors worldwide are reevaluating their positions in major technology stocks following the launch of DeepSeek's new artificial intelligence assistant. The Chinese startup unveiled a free AI model that operates at a fraction of the cost and data requirements of its Western counterparts, potentially reshaping the global AI landscape.
On Monday, futures on the Nasdaq 100 dropped nearly 4%, hinting at the possibility of the index experiencing its most significant daily decline since September 2022. Pre-market trading saw shares in AI giants tumble: Nvidia fell 10%, Oracle dropped 8%, and Palantir lost 7%.
DeepSeek's assistant quickly surpassed U.S. rival ChatGPT in Apple Store downloads, offering a viable and cost-effective alternative. This development raises questions about the sustainability of the substantial investments made by Western tech companies like Apple and Microsoft in AI technologies.
\"We still don't know the details and nothing has been 100% confirmed regarding the claims,\" said Jon Withaar, a senior portfolio manager at Pictet Asset Management. \"But if there truly has been a breakthrough in reducing the cost to train models from over $100 million to $6 million, this is very positive for productivity and AI end-users.\"
From Tokyo to Amsterdam, shares in AI-focused companies experienced declines. In Europe, ASML, a key supplier to the semiconductor industry, dropped almost 11%. In Japan, SoftBank Group slid more than 8% after announcing a $19 billion commitment to fund Stargate, a data-center joint venture with OpenAI.
Silicon Valley venture capitalist Marc Andreessen referred to DeepSeek's R1 model as AI's \"Sputnik moment,\" drawing parallels to the Soviet Union's 1957 satellite launch that ignited the space race. \"DeepSeek R1 is one of the most amazing and impressive breakthroughs I've ever seen—and as open source, a profound gift to the world,\" he commented.
The advent of DeepSeek's low-cost AI model has led investors to question the capital expenditure of major tech companies heavily invested in AI. \"The market is questioning the capex spending of the major tech companies,\" said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, noted concerns about the perception of technological superiority. \"The idea that the most cutting-edge technologies in America are the most superior globally—there's concern that this perspective might start to change,\" he said.
As DeepSeek's AI assistant gains traction, the global tech industry may be on the cusp of significant shifts, prompting investors and analysts to closely monitor developments in AI innovation and investment strategies.
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DeepSeek's 'Sputnik moment' prompts investors to sell big AI players
cgtn.com
