DeepSeek's new AI model causes major disruption in global tech stocks

(MENAFN) Chinese AI startup DeepSeek's new AI model caused major disruption in global tech Stocks on Monday, leading to a sharp decline in nasdaq futures in Japan, which fell over 3%. Nasdaq 100 futures dropped as much as 3.2%, and S&P 500 contracts slid 1.9%. European markets saw similar losses, with Nvidia shares dropping by about 7%, and other tech giants like Tesla, Amazon, and Meta also experiencing losses of more than 2%. Dutch chipmaker ASML's shares fell more than 8%.

The selloff followed DeepSeek's launch of its free AI assistant, which is claimed to be cost-effective and capable of operating on less advanced chips than those used by OpenAI's ChatGPT. DeepSeek's success has raised doubts about the high valuations of companies like Nvidia, a key player in the AI sector. Experts warn that DeepSeek's achievement could potentially derail the entire AI supply chain driven by costly investment from a few big players.

The DeepSeek assistant, which has already outperformed ChatGPT and become the top free app on the Apple App Store, poses a serious challenge to Silicon Valley's dominance in the AI field. The company's DeepSeek-V3 model, launched in January, was trained using Nvidia’s H800 chips, costing under $6 million, and is viewed as a serious competitor to established AI models from OpenAI and Meta. The emergence of DeepSeek is expected to intensify the global AI race and challenge the future dominance of American tech firms.

MENAFN04022025000045015687ID1109165256