One of the largest benefactors of the AI surge, US tech companies, had their price plummet by about 17%, ending at $118.58, on Monday, when Chinese AI firm DeepSeek emerged as a serious rival, causing a massive shock to Wall Street.The US stock market is in turmoil due of China’s DeepSeek and this followed the announcement by the Chinese firm DeepSeek, which was established in 2023, of its most recent AI model, R1, which is said to be on par with US-developed models like OpenAI’s ChatGPT at a far lower cost. Investors were uneasy about the announcement because they worry that these developments would upend the profitable AI supply chain that has fueled Silicon Valley’s expansion. Venture entrepreneur Marc Andreessen told news agency AP that this is AI’s Sputnik moment.
It had an instantaneous and extensive effect. Tech stocks took the brunt of the 1.7% decline in the S&P 500. Bond rates dropped as investors looked for safer assets, while shares of Microsoft and Meta Platforms, both of whom have significant investments in AI technology, witnessed steep drops.
After its AI assistant app shot to the top of Apple’s free app list in the US over the weekend, DeepSeek attracted attention from all around the world. According to the business, its R1 model has sophisticated reasoning skills comparable to those of OpenAI’s priciest systems, but at a far lower cost. Analysts have observed that.
