The rise of DeepSeek in the market caused some unexpected consequences. AI industry players suffered losses due to the immense popularity of the new AI model-based DeepSeek AI assistant. This not only led to financial losses but also raised concerns about the future. In this article, we will review which aspects of this innovation had the greatest impact on AI stocks.
AI Stocks Drop as DeepSeek Alarms Market Leaders
Recently, the Chinese startup introduced a free AI assistant powered by the latest DeepSeek-V3AI model, developed at relatively low costs. It is also reported that the DeepSeek-R1model is 20 to 50 times cheaper than the OpenAI o1 model. These innovations, valued at just $6 million, gained significant attention, and the released chatbot quickly became popular, surpassing its rival ChatGPT in download numbers.
First of all, the developed model is open-source, and secondly, its performance is based on an inference-time computing technique, which means that only the most relevant parts of the model are activated for each query.
This sudden rise caused concern, as doubts emerged about the future of AI leaders – will expensive technologies really be necessary to create advanced AI solutions?
Who Was Affected the Most in AI Stocks?
A major shock came when Nvidia, the global leader in accelerated computing and supplier of computer chips, saw its AI stocks price drop by about 17%. This is already being recognized as one of the largest single-day percentage drops in Wall Street’s stock market history. The company lost nearly $600 billion, marking the biggest single-day loss in market value.
Although DeepSeek used Nvidia GPUs to train its model, the company’s stock still suffered massive losses following this breakthrough. One reason is that DeepSeek may have proven that a similar product can be developed with very low investments, posing a direct threat to one of the leading computer chip manufacturers. Investors grew concerned that the demand for such hardware could decline after this breakthrough.
Broadcom, another software manufacturer, also saw its AI stocks drop by 17%, while ASML fell by 6%. In addition to fears about decreased demand for AI-related hardware, another risk emerged in the energy sector. Concerns arose that new AI technologies might require less energy, leading to a decline in energy stock values. GE Vernova, which produces wind and gas turbines, suffered a 21% decline. Vistra, an electricity generation company, experienced a 28% drop.
Such AI stocks fluctuations are being interpreted in different ways. On the one hand, there is a sense of uncertainty, fueling discussions about AI development and financial investments in the sector. On the other hand, some analysts believe this event is overestimated, arguing that these companies will remain competitive since AI infrastructure demand is continuously growing.
According to the latest data, stocks began to recover the day after the decline, with Nvidia rebounding by more than 6%.
Final Thoughts
Although these AI stocks market fluctuations can be seen as ambiguous, they have caused significant turmoil in the AI industry. DeepSeek’s breakthrough, positioning itself as a competitor to the U.S. market, indicates that similar events could become more frequent in the future. The impact of such technological advancements on the market needs to be reevaluated and reassessed.
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Sources: CBS News, Forbes, Global News, Reuters
