The technology sector is facing significant turbulence following the launch of DeepSeek, a Chinese AI startup’s cost-effective large language model. This development has led to a substantial decline in tech stocks, with market capitalization losses potentially reaching $1.2 trillion.
Nvidia, a leading microprocessor manufacturer, experienced a dramatic drop of over 12% in its stock price, resulting in a market value loss exceeding $400 billion. This marks the largest single-day devaluation in the company’s history.
The introduction of DeepSeek’s AI model, which offers comparable capabilities to existing models at a fraction of the cost, has raised concerns about the sustainability of current AI infrastructure investments. Analysts suggest that this development could prompt a reevaluation of AI infrastructure investments and potentially lead to a broader market correction.
The impact of DeepSeek’s entry into the AI market has been felt across various sectors, with significant declines in stock prices for companies such as Microsoft, Palantir, and ASML. The Nasdaq Composite Index fell by approximately 2.7%, reflecting widespread investor apprehension.
In response to these developments, U.S. President Donald Trump has announced a $500 billion AI initiative, named Stargate, aimed at reinforcing the nation’s leadership and competitiveness in artificial intelligence.