Nvidia drops as China’s DeepSeek threatens AI dominance

Nvidia drops 17% amid global tech sell-off sparked by China’s DeepSeek, raising U.S. AI competitiveness concerns.

Nvidia shares dropped by 17% on Monday, contributing to a broader sell-off in the U.S. tech sector, triggered by concerns regarding China’s AI startup DeepSeek.

The company has generated apprehension over America’s leading position in artificial intelligence through its launch of a free, open-source large language model. DeepSeek claims to have developed this model within two months for under $6 million, significantly less than typical costs in the West.

Nvidia’s decline marked its worst day since March 2020, with shares hitting levels unseen since October. Other tech stocks also suffered, with Micron and Arm Holdings both experiencing notable losses.

The global impact was evident with European and Asian chipmakers, including ASML and Advantest, seeing substantial downturns.

Marc Andreesen praised DeepSeek’s model on social media, calling it an impressive breakthrough. However, analysts emphasize that despite DeepSeek’s success, U.S. companies still possess advantages through access to superior GPUs, essential for training large AI models.

Concerns regarding computing costs have arisen, but analysts argue that top-tier AI companies will continue to rely on advanced chips, as highlighted by the recent announcement of a $500 billion AI infrastructure project.

While skepticism remains about DeepSeek’s cost efficiencies, the significance of its models in the competitive landscape of AI cannot be understated.