DeepSeek recently released globally, and the US Stock Market took a massive hit. DeepSeek, a Chinese AI company, produced a chatbot that runs on significantly cheaper equipment than that of Open AI, Google, Microsoft, etc. It initially was said to produced and trained for about $5.6M.
NVIDIA, who had been a force in the market during 2024, took a $560B market cap hit - and the market was down 600 points during the day.
As the week has gone on, more and more people have looked into DeepSeek, and how it was even possible that it was produced for that cheap. After some investigation, multiple experts are estimating DeepSeek actually costed about $1B to produce. While still significantly cheaper than development costs for other US AI's, the alarm bells may not be as bad as initially anticipated.
NVIDIA has responded while posting a relatively strong week, up 3%. While still not to the levels it was before DeepSeek was released, it is a good sign for the US Stock Market and AI alike. The market has stabilized after its free fall on the 27th of January.
The jury is still out on what the implications of DeepSeek will be. The US Government is pushing to get it banned from government devices, but we will wait and see if it can beat the AI giants of the US, or if it will be another failed attempt to disrupt the industry.
https://www.visualcapitalist.com/deepseek-tanks-stock-market-nvidia/
4 comments:
This is a fascinating development in the AI industry and the stock market. The initial reaction to DeepSeek’s release shows how sensitive the market is to new technological advancements, especially when they come from unexpected players. While the reported cost difference raised alarms, it’s interesting to see how the actual investment is still significantly lower than that of US AI giants. NVIDIA's quick rebound is reassuring, but it will be interesting to see how DeepSeek competes in the long run. Definitely a space to watch! Thanks for sharing this update.
I agree with your assessment that the initial concerns over DeepSeek may be more inflated than reality warrants. While the creation of a chatbot that can be run at a significantly cheaper cost than US companies is somewhat concerning, the fact that it appears that DeepSeek is not producing the same quality of product is reassuring.
It’s interesting how quickly the market reacted to DeepSeek. Now that the cost estimates have been adjusted, do you think it can really compete with OpenAI and Google, or will it struggle against the established AI leaders?
AI is evolving fast and Deep Seek's release has already caused major changes. If it can maintain its momentum, could this be the first real challenge to US dominance in AI since its cheap or will it get banned before it can do any major changes?
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