Chinese AI start-up DeepSeek AI threw the world into
disarray with its low-priced AI assistant, sending Nvidia's market cap
plummeting a record $593 billion in the wake of a global tech sell-off. The
Nasdaq fell 3.1% after Microsoft, Alphabet, and Broadcom dragged the index
down.
Fear of falling behind in a competitive battle with China's
developing AI ecosystem is leaving investors worried.
Full Report:
A free, low-cost AI assistant launched by a Hangzhou-based
start-up called DeepSeek AI has thrown global markets into chaos. Nvidia, once
the crown jewel of Silicon Valley, saw its market cap drop by a historic $593
billion, or 17% in a single day. Broadcom was not far behind with a 17.4%
decline, while Microsoft and Alphabet fell 2.1% and 4.2%, respectively.
The Philadelphia Semiconductor Index dropped the most since
March 2020, falling 9.2%. Tech companies worldwide did not fare much better:
Japan's SoftBank declined 8.3%, Europe's ASML fell 7%, and data center
infrastructure firm Vertiv Holdings nosedived 29.9%.
DeepSeek AI is garnering fame, promising to be more
efficient at a fraction of the cost than peers like ChatGPT and Google's
Gemini. It's been some days since it overtook ChatGPT in downloads in major
international markets worldwide, including the U.S., UK, and Singapore.
Interestingly, this fast success has raised concerns about the future monopoly
of the U.S.-based AI technology when an alternative, Chinese native, comes into
the fray.
As markets rebalance, the tech sector has to ask a very
critical question: will U.S. companies retain their lead in the AI game, or
will China's cost-effectiveness alter the rules of competition?
Market Impact:
1. Nvidia: -17% ($593B market cap loss)
2. Broadcom: -17.4%
3. Alphabet (Google): -4.2%
4. Microsoft: -2.1%
5. Philadelphia Semiconductor Index: -9.2%
6. SoftBank (Japan): -8.3%
7. ASML (Europe): -7%
8. Vertiv Holdings: -29.9%
Investors and analysts are preparing for prolonged
volatility as the tectonic plates of the AI landscape shift dramatically.
