The stock price of Nvidia and other US technology firms plunged on Monday over the emergence of China’s low-cost artificial intelligence company, Deepseek.
In early trading on Monday, AI chipmaker Nvidia slumped 11 percent in early trading, and Microsoft shares tumbled 3.8 percent, according to a report by Reuters. Chipmakers Broadcom and Advanced Micro Devices lost more than 14 percent and 5 percent, respectively.
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Microsoft lost 4 percent, Palantir lost 4 percent, and other mega cap tech names Amazon and Meta Platforms shed 2.4 percent and 1.4 percent, respectively, according to CNBC. If this trend is sustained throughout the day, investors will lose more than $1 trillion at the end of trading on Monday.
In December, DeepSeek launched a free, open-source large language model, claiming to have developed it in just two months at a cost of under $6 million. Last week, the company released a reasoning model that it claims is on par with OpenAI’s o1 model.
The startup noted that its new flagship AI model, R1, showed a new level of reasoning, tweeting, “DeepSeek-R1 is here. Performance on par with OpenAI-o1. Fully open-source model and technical report. MIT licensed: distill and commercialise freely.”
Since last week, uptake in its tech has increased, and on Monday, it overtook ChatGPT in terms of Apple Store downloads in the US.
According to experts, Deepseek’s product is a huge leap in terms of scale and efficiency and may upend expectations of how much power and computing will be needed to manage the AI revolution, considering it was done on a cheaper budget than AI models like ChatGPT.
Read also: Meet DeepSeek, OpenAI’s cheaper, open source competition
Arnaud Bertrand, founder of HouseTrip and Me & Qi, noted on X, “It’s essentially as if someone had released a mobile on par with the iPhone but was selling it for $30 instead of $1000.”