Wall Street experienced a decline in AI-related stocks on Monday, fueled by the rise of Chinese startup DeepSeek. DeepSeek has gained attention for potentially developing a competitive AI model at a significantly lower cost compared to major U.S. companies like Meta Platforms and Microsoft. While some analysts see this as a buying opportunity, the initial impact has been a sell-off, particularly affecting Nvidia shares. Concerns are being raised about the potential for reduced capital expenditures in the AI sector if DeepSeek's model proves successful.
Wall Street woke up Monday to an artificial intelligence stock rout driven by the emergence of Chinese startup DeepSeek, which gained buzz over the last week for possibly building a competitive model for a fraction of the money that big U.S. companies such as Meta Platforms and Microsoft are currently spending.
" Jefferies analyst Edison Lee: "Re-evaluating computing power needs could cause 2026 AI capex to fall ...We believe DS's success could drive two possible industry strategies: 1) still pursue more computing power to drive even faster model improvements, and 2) refocus on efficiency and ROI, meaning lower demand for computing power as of 2026." Bernstein analyst Stacy Rasgon: "Is DeepSeek doomsday for AI buildouts? We don't think so...
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