DeepSeek's announcement of a cost-effective AI model shakes up the tech market. While DeepSeek's success is celebrated, the news triggers a sell-off in tech giants, particularly Nvidia, impacting the S&P 500 and the net worth of prominent CEOs.
A company named DeepSeek announced the development of a large language model that rivals the capabilities of prominent U.S. AI companies but at a significantly lower cost. DeepSeek swiftly ascended to the top spot on Apple's App Store for free applications by Monday morning. This achievement holds particular weight considering the U.S. government's restrictions on Chinese access to advanced AI chips.
Monday's market activity witnessed a notable decline in the tech sector, marked by the S&P 500's biggest drop since September 2020. Nvidia, alongside seven other tech stocks, experienced double-digit losses, contributing to the overall decline. Apple's shares, however, surged by over 3%, partially cushioning the impact on the index. Nvidia's market value plummeted, exceeding the combined market value of home improvement giants Home Depot and Lowe's. Despite this setback, Nvidia's market value remains substantial at approximately $2.9 trillion.The selloff triggered a ripple effect on the net worth of prominent tech executives. Larry Ellison, CEO of Oracle, saw his net worth decline according to Forbes' Real-Time Billionaires list. Ellison's wealth had previously experienced a surge following President Donald Trump's announcement of a new partnership between OpenAI, Oracle, and SoftBank, which pledged up to $500 billion for AI-related infrastructure. Jensen Huang, CEO of Nvidia, witnessed a significant drop in his net worth, shedding $20.8 billion to reach $103.6 billion. Interestingly, Vistra Corp., a non-tech company specializing in independent power production, experienced the steepest stock decline in the S&P 500. Vistra's shares had previously soared due to expectations that the expansion of AI infrastructure in the U.S. would necessitate substantial power consumption. The fact that the S&P 500 index declined sharply despite over three-fifths of its component stocks rising underscores the disproportionate influence of tech stocks like Nvidia
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