The tech stock market has suffered significant losses following the launch of a free open-source AI tool by Chinese startup DeepSeek, attributed to its low development cost of $6 million. Investors have reacted negatively, leading to a 16% drop in Nvidia's shares. However, analysts like Dan Ives and Joshua Buchalter see this as a buying opportunity, arguing that DeepSeek's capabilities do not pose a significant threat to existing AI companies. JPMorgan analysts remind investors of an inevitable optimization phase in AI investments, similar to past technology investment cycles.
DeepSeek's lower startup costs and its reported use of reduced capacity chips from Nvidia was recognized as a warning signal to the U.S. tech industry.
This news serves as a reminder to investors about the likelihood of an optimization phase for AI investments, reminiscent of past tech investment cycles.
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