Big tech stocks like Nvidia, Microsoft, and Meta fell sharply in premarket trading due to fears that the Chinese AI startup DeepSeek could undermine US dominance in the AI field. Nvidia's shares fell nearly 12%, while Microsoft and other tech giants also saw declines. DeepSeek launched a competitive open-source language model developed in just two months for under $6 million, contrasting sharply with the billions spent by US companies. This spurred global market sell-offs, particularly in the semiconductor sector, questioning the efficiency of US AI research investments.
DeepSeek clearly doesn't have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive.
The rapid progress of DeepSeek has sparked scrutiny over the immense sums being funneled into AI research by leading US firms, raising questions about efficiency and cost-effectiveness.
Shares of Nvidia plunged nearly 12% on news reports about the capabilities of DeepSeek - a China-based startup which has made waves in the industry.
The developments triggered a global sell-off, particularly impacting semiconductor firms, as fears mounted over the sustainability of US dominance in the sector.
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