- DeepSeek’s launch of a cost-effective, open-source AI model has triggered a $2 trillion selloff in US equity markets, raising concerns about the efficiency of AI investments by US companies.
- Industry leaders suggest DeepSeek may have access to advanced NVIDIA GPUs despite export controls, challenging the startup’s claims and potentially easing market fears.
A small Chinese AI startup, DeepSeek, is responsible for erasing $2 trillion from the US equity market, within 12 hours.
Nvidia’s stock is down ~17% at the time of writing, while shares of other US-based AI-related companies, including Oracle, Broadcom, and AMD, have fallen between 12% and 20%. Microsoft, a major investor in OpenAI, has also dropped more than 3%. However, Apple stock has gained, with the market seemingly dismissive of its Apple Intelligence product.
DeepSeek launched a free, open-source large language model in December, reportedly developed in just two months for under $6 million. This news and its implications are only just filtering into mainstream market consciousness now following the release of DeepSeek’s chatbot app.
Investors are now questioning why US firms are spending hundreds of billions on Nvidia chips when a startup claims to achieve significant results at a fraction of the cost and raised concerns about the US losing its perceived dominance in the AI sector.
However, industry figures, including Elon Musk and Scale AI CEO Alexandr Wang, are scrambling to change the narrative though. Some suggest that DeepSeek likely has access to 50,000 NVIDIA Hopper GPUs—despite their claims of using just 10,000 A100 GPUs—due to U.S. export restrictions.
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