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Nasdaq Falls 3 Percent as China’s DeepSeek AI Ignites Market Rout
DeepSeek, a Chinese artificial intelligence (AI) app that has soared to the top of the U.S. App Store and overtaken OpenAI’s ChatGPT, flooded the financial markets with red ink at the Jan. 27 opening bell.
The tech-heavy Nasdaq Composite Index declined by 3 percent to kick off the trading week. The S&P 500 declined by nearly 2 percent, while the blue-chip Dow Jones Industrial Average shed about 100 points.
Dow Jones Market Data projects that the market rout erased more than $1 trillion in value in early trading.
Investors were rattled by the Chinese tech startup for its efficient and cost-effective open-source AI models. The company, founded in 2023, constructed models—DeepSeek-V3 and DeepSeek-R1—that outperform premier models from Google, Meta, and OpenAI on tasks such as coding, mathematics, and natural language reasoning.
This sparked fears across the markets because DeepSeek’s models appear to be developed at a fraction of the cost, using less energy and fewer employees.
Wall Street and Silicon Valley might be rethinking their calculations, according to Giuseppe Sette, the president of AI market research company Reflexivity. This could have vast implications for industry titans such as Nvidia, various semiconductor businesses, and even the energy sector.
“DeepSeek has taken the market by storm by doing more with less,” Sette told The Epoch Times. “In layman’s terms, they activate only the most relevant portions of their model for each query, and that saves money and computation power. This shows that with AI, the surprises will keep on coming in the next few years.”
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