DeepSeek, founded by quant fund chief Liang Wenfeng, released its latest AI model last week and is now seen as a competitor to OpenAI and Meta Platforms Inc.
U.S. technology stocks fell on Monday as Chinese AI startup DeepSeek cast doubt on U.S. leadership in the industry. The move sent shares of several chipmakers lower, with Nvidia, one of the world’s most valuable companies, falling more than 12% in pre-market trading.
Nvidia
Shares of Nvidia Corp fell in pre-market trading in the United States today as Chinese artificial intelligence (AI) startup DeepSeek performed on par with Western chatbots but fell to a fraction of its price, Bloomberg reported.
At 4 pm IST (5:29 am ET), the company’s stock was trading at $126.75 on the Nasdaq. This is a decrease of 11.13% or $15.87.
Meanwhile, the tech-heavy Nasdaq Composite Index also fell 0.50% or 99.38 points to 19,954.30. DeepSeek, founded by quant fund head Liang Wenfeng, released its latest AI model last week and is now seen as a competitor to OpenAI and Meta Platforms Inc.
But the latest AI model, DeepSeek, released last week is seen as a strong competitor to OpenAI and Meta Platforms Inc because it is cheaper to implement and works on less sophisticated chips. According to the report, the DeepSeek-V3 model was developed at a cost of $5.6 million, which is much less than the amount used by the US tech giant.
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According to a Reuters report, the open-source product has climbed to the top of Apple Inc.’s App Store rankings. The report, citing Jefferies analysts, immediately raised concerns that the high-end chips and extensive computing power could disrupt current AI business models that rely on energy.
This comes at a time when the US has banned the export of advanced semiconductor technologies to China and has restricted the sale of advanced Nvidia AI chips to several countries, including its allies.
Shares of ASML, based in the Netherlands, also fell for the same reason. The Dutch government has also restricted the export of immersion deep ultraviolet lithography systems to China due to pressure from the Biden administration.
DeepSeek
However, DeepSeek has worked around this by focusing on greater efficiency with limited resources, according to the report. This all comes as OpenAI, SoftBank Group Corp and Oracle Corp announced a $100 billion joint venture called Stargate to build data centers and AI infrastructure projects across America.
