Олексій Дзюба Hot News 28 January 2025, 08:34

Chinese startup DeepSeek has knocked $1 trillion off tech stocks

The company has forced investors to reconsider potential future investments in AI hardware.

Tech stocks have lost about $1 trillion as of Monday evening following the progress of Chinese AI startup DeepSeek, the Financial Times reports .

Last week, DeepSeek released a new version of its large language model that achieved nearly the same performance as its counterparts from American companies OpenAI and Meta, but at a much lower cost to develop. DeepSeek also uses far fewer Nvidia chips than its competitors.

After the release of a new version of the DeepSeek VMM, tech stocks fell as investors overestimated likely future investments in AI hardware.

For example, shares of Nvidia, the main manufacturer of graphics cards used to power AI, fell 12%, losing $384 billion in market value. Last summer, Nvidia became the most expensive company in the world, its market capitalization reached $3.335 trillion, increasing 30 times since 2019.

Photo — Top record company stock crashes

Shares of European chipmaker ASML fell 8.2%. AI model developers Microsoft and Meta lost 3.7% and 2%, respectively.

Shares of Siemens Energy, which supplies electrical equipment for AI infrastructure, fell 19%, while Schneider Electric, a French electricity producer that has invested heavily in data center services, fell 9.2%.

According to UBS, investments in artificial intelligence by major US technology companies last year reached $224 billion, and in 2025 the amount will increase to $280 billion. Last week, OpenAI and SoftBank announced a plan to invest $500 billion over the next four years in artificial intelligence infrastructure.

About DeepSeek

DeepSeek, a Chinese artificial intelligence lab funded largely by High-Flyer Capital Management, recently gained popularity after its chatbot rose to the top of the Apple App Store charts .

DeepSeek’s language models, which were trained using efficient computational methods, have many analysts and technologists in the West wondering whether the US can maintain its lead in the AI race and whether demand for AI chips will persist. The worry has sent tech stocks, including top graphics processor maker Nvidia, tumbling , and Mark Zuckerberg hastening to announce that Meta plans to invest $60 billion in AI by 2025 .

The hype around DeepSeek became so great that even monobank co-founder Oleg Gorohovsky and the head of the Ministry of Digital Affairs, Mykhailo Fedorov, wrote cryptic, laconic posts about the startup. The latter later published a more detailed post on Telegram.

“We think DeepSeek is more of an evolution than a revolution: they have successfully combined existing developments and done it cheaper. But this is unlikely to affect the race to create AGI (super-AI), which remains the main goal of the industry. The current market reaction may be exaggerated, but investors are starting to think about the effectiveness of large expenditures in AI (remember 500 billion on Stargate),” Fedorov noted.

Previously, dev.ua did a detailed analysis of how DeepSeek managed to outperform its competitors .

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