Tech stocks saw a significant drop on Monday amidst fears that Chinese AI firm DeepSeek has surpassed U.S. dominance in AI development. The Nasdaq Composite fell 3.4%, while the Dow and S&P 500 also tumbled. The sell-off was triggered by DeepSeek’s claims of creating an efficient AI model in a short time and with minimal cost, raising concerns about China’s AI investments surpassing those of the U.S.
DeepSeek’s success has led to its app becoming the top free app in the Apple App Store, surpassing OpenAI’s ChatGPT. This development caused significant losses in the stock market, particularly for companies like Nvidia, Micron Technology, and Arm Holdings, among others. Mega-cap tech firms like Microsoft, Google, and Meta Platforms also saw declines.
Despite restrictions on advanced semiconductor sales to China, concerns about DeepSeek’s advancements have impacted companies like Constellation Energy, Vistra Energy, and Siemens Energy. Some analysts remain skeptical of DeepSeek’s claims, suggesting that their achievements may not be as groundbreaking as they appear. However, other experts believe that DeepSeek’s approach to AI could have long-term benefits for the industry.
Overall, the unexpected success of DeepSeek has caused upheaval in the tech industry, with implications for both investors and companies involved in AI development. It underscores the potential for further surprises in the AI sector in the coming years.
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