Nvidia’s stock plunged over 16% after the launch of DeepSeek, a new AI chatbot from China, which has quickly gained popularity and sparked concern among investors about its impact on the AI market.
DeepSeek, created by 40-year-old entrepreneur Liang Wenfeng, surfaced just weeks after the high-profile appointments in the tech industry and claims to provide a capable AI solution at a fraction of the cost of its competitors. According to reports, this has raised alarms in the U.S. and Europe, where tech companies like Nvidia, Microsoft, and Google felt the immediate effects in their stock prices.
Liang’s company has made significant strides since its inception in 2023, largely due to its reported collection of Nvidia A100 chips, which are currently banned from export to China. By creatively pairing these powerful chips with more accessible, lower-end alternatives, Liang has quickly positioned DeepSeek as a formidable competitor.
In a bid to reassure users amidst cybersecurity concerns, DeepSeek announced it has temporarily limited new registrations due to recent malicious attacks, ensuring that existing users can still access the platform.
On the same day, President Trump commented on the significance of DeepSeek’s emergence, drawing parallels to the U.S. being caught off guard during the space race after the launch of Sputnik. He emphasized that this development could reshape perceptions of China’s role in technology.
The U.S. has been closely monitoring the rise of AI companies like DeepSeek, especially in the wake of increasing concerns about data privacy and ethical use of algorithms.
While DeepSeek’s rapid ascension poses questions regarding the future profitability of established players like Nvidia, experts caution that challenges unique to Chinese firms, including regulatory hurdles, could hinder their long-term growth prospects. Citi analysts noted that U.S. access to advanced chips remains a competitive edge even as new players enter the field.
As the landscape of AI continues to evolve, the impact of low-cost alternatives such as DeepSeek could signal a shift in investment strategies and market dynamics across the tech industry.
Credit: BBC News