Nvidia, AI Stocks Slide Amid Hype Over China's DeepSeek

Shares of Nvidia Corp and ASML Holding NV plummeted on Monday as China's DeepSeek continued to make waves in the AI sector. The Chinese AI startup has introduced a groundbreaking model that delivers performance comparable to ChatGPT while utilizing less advanced and cost-intensive hardware.

Disrupting the AI Market
DeepSeek’s AI assistant, powered by the V3 model, has overtaken ChatGPT to become the top-rated free application on Apple’s App Store in the United States. Its cost-efficient approach is being hailed as a game-changer, challenging the dominance of companies like Nvidia, which supply advanced AI chips crucial for training models like ChatGPT.

DeepSeek researchers disclosed that their V3 model was trained on Nvidia’s H800 chips, spending less than $6 million—a strikingly low figure compared to industry norms.

Stock Market Impact
The buzz around DeepSeek rattled investor confidence in key players within the AI supply chain:

• Nvidia Corp shares dropped 11.54% on NASDAQ, closing at $126.16, down from the previous close of $147.22.
• ASML Holding NV, which develops high-end chip manufacturing machines, saw its shares fall 11.7%, trading at €618.5 in Amsterdam compared to €700.70 previously.

The sudden decline reflects fears that cost-efficient solutions like DeepSeek could upend the AI industry and diminish the profitability of chipmakers and AI hardware producers.

A Turning Point in AI Competition
DeepSeek’s rise is particularly significant given the US administration’s restrictions on exporting advanced semiconductors to China. Despite these barriers, DeepSeek has emerged as a formidable competitor, demonstrating that cutting-edge AI is achievable with fewer resources.

Founded in 2023, DeepSeek is based in Hangzhou and has quickly gained international attention for its innovative approach. Its success is seen as a warning sign for US tech giants that dominate the AI space.

The rise of DeepSeek signals a shift in the global AI landscape, where affordability and efficiency could play a more prominent role in determining market leaders.