Lagatar24 Desk
New York: US chip-making giant Nvidia witnessed a staggering 17% drop in its stock value on Monday, erasing nearly $600 billion in market capitalization. The plunge came after the emergence of DeepSeek, a Chinese generative AI startup, whose low-cost model has sparked fears of American tech dominance being challenged.
DeepSeek, based in Hangzhou, China, developed a generative AI chatbot that reportedly rivals US counterparts at a fraction of the cost. The chatbot, which topped Apple’s US App Store as the highest-rated free app, was built with an investment of just $5.6 million—significantly lower than the billions spent by US tech giants.
Global Markets Rattled
The ripple effects of DeepSeek’s announcement were felt across the tech sector:
• Broadcom: Fell by 17.4%.
• ASML: Tumbled 6.7%.
• Constellation Energy: Sank more than 20%.
Wall Street’s Nasdaq index dropped over 3%, and the broader S&P 500 shed 1.5%. Asian markets were also hit, with Japan’s SoftBank plummeting 8% and semiconductor firms Advantest and Tokyo Electron declining 8% and 5%, respectively.
Industry Reaction
Kathleen Brooks, Research Director at XTB, remarked, “China’s ability to deliver innovative solutions faster and at a lower cost raises questions about the US’s long-held dominance in the AI sector.”
However, skepticism looms. Art Hogan, Chief Market Strategist at B. Riley Wealth, noted, “The market is in a ‘shoot first, ask questions later’ mode. Many are questioning the credibility and implications of DeepSeek’s claims.”
Cybersecurity Concerns
As DeepSeek gained traction, the company reported large-scale cyberattacks on its platform, prompting it to limit new user registrations.
Broader Implications
The turmoil comes as major US tech players like Meta and Microsoft prepare to report their earnings this week, potentially addressing the rise of Chinese competition. Meanwhile, the US Federal Reserve and European Central Bank are expected to make key interest rate decisions, adding another layer of uncertainty to global markets.
