Nvidia, the US tech giant, lost over a sixth of its value after the soaring popularity of the Chinese artificial intelligence (AI) application. DeepSeek is a Chinese AI chatbot developed with a fraction of the investment of its rivals. The application was launched last week and already is the most downloaded app in the US.
With DeepSeek’s sudden rise in popularity, Nvidia and other renowned tech firms like Microsoft and Google saw their stock prices shaking.
DeepSeek AI Development
DeepSeek was created by Liang Wenfeng in Hangzhou, China. He successfully developed this app at a fraction of the cost compared to his competitors. When OpenAI ChatGPT was made, billions were invested in the development. DeepSeek’s maker said that $5 million was the estimated cost for renting certain infrastructure in training its model. However, the cost does not include the prior research and experiments that were conducted to develop this AI. The low-cost AI model has been trained to achieve similar results as ChatGPT. This model excels in tasks such as mathematics, coding, and natural language reasoning.
Nvidia stock price declines drastically.
The net profit of Nvidia skyrocketed from 4.8 billion dollars in 2022 to 66.7 billion dollars in 2024. Almost 600 billion dollars in market cap loss was faced by Nvidia this Monday after DeepSeek became popular in America.
The sudden success of DeepSeek has unsettled the US and European markets. A significant drop of 16.9% in Nvidia’s stock was seen on Monday. Other tech companies like Microsoft and Google also faced significant losses in the US stock market.
DeepSeek faces challenges despite its market success. The company announced that it has been under cyberattacks, which can affect its registration temporarily. The low-cost approach is a strength, but it also sparked a debate, as expressed by Liang, the founder.
