The release of DeepSeek's open-source AI model, claimed to be developed in just two months for under $6 million, has sent shockwaves through the tech industry. American tech giants like OpenAI, Microsoft, and Meta are facing concerns about being overtaken by China in the AI race. The news triggered a sell-off in the stock market, with Nasdaq plunging over 3%, the Dow falling less than a point, and the S&P 500 dropping almost 2%. Nvidia, a key player in AI hardware, saw its shares plummet as much as 18%, potentially leading to the largest market value drop in U.S. history. Other tech giants like Microsoft, Alphabet, and Meta also experienced significant losses.
DeepSeek released an open-source artificial intelligence model in December after saying that it took only two months and less than $6 million to create it.
Among the biggest losers in the stock market slump: chipmaker Nvidia, whose shares plummeted as much as 18%. Nvidia has been among the better performers as of late, with shares soaring more than 200% over the course of the last two years making it one of the largest companies in the world. Worries about DeepSeek's alleged advances come despite export controls on sales of advanced semiconductors to China.
At the end of 2024, Microsoft said it planned $35 billion in investments to build"trusted and secure AI and cloud datacenter infrastructure."
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