DeepSeek’s AI launch causes major losses for Nvidia

(MENAFN) The release of a free AI assistant by Chinese startup DeepSeek on Monday led to a significant selloff in tech stocks, particularly affecting US chipmaker Nvidia. DeepSeek’s new AI model, which the company claims uses far less data and is much more cost-effective than its competitors, sparked a sharp decline in Nvidia’s market value, resulting in a loss of over USD500 billion.

DeepSeek’s AI assistant quickly gained widespread use, contributing to increased selling pressure on tech stocks across the board. The assistant’s success in surpassing other popular AI models, including OpenAI’s ChatGPT, allowed it to become the most downloaded free app in the US, further fueling concerns about the future competitiveness of Western companies in the AI space.

The launch of DeepSeek’s low-cost AI model has raised questions about the long-standing dominance of Western firms, particularly in the US, and their heavy financial investments in AI technology. The news highlights how rapidly evolving AI innovations could reshape the global market, especially with China’s growing influence in the sector.

Nvidia’s stock, which closed at USD142.62 on Friday, dropped by around 17 percent to USD118.19 by 2150GMT. This marked Nvidia’s highest daily loss since March 2020, and the company’s market capitalization fell below USD3 trillion, pushing it from second to third place in the rankings of the world’s largest companies.

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