DeepSeek's AI Disrupts Nvidia, Microsoft Stocks Plunge

Nvidia's stock has taken a significant hit, dropping as much as 16% following the emergence of DeepSeek, a small Chinese company that has demonstrated the ability to train advanced AI models using far fewer chips than previously thought necessary. DeepSeek's recent R1 model has raised concerns among U.S. tech giants, including Microsoft and Alphabet, whose shares also fell due to fears that their heavy investments in AI infrastructure may not be sustainable against DeepSeek's cost-effective approach. Analysts suggest that while Nvidia currently dominates the AI chip market, DeepSeek's innovative methods challenge the notion that larger investments necessarily yield better AI capabilities. The rapid development of DeepSeek's models, reportedly achieved within a couple of months for under $6 million, has prompted questions about the future competitiveness of U.S. tech companies in the evolving AI landscape. The situation reflects a potential shift in the balance of power in AI technology, as investors reassess the viability of traditional high-cost AI development strategies. This disruption serves as a wake-up call for U.S. companies to innovate and adapt in response to emerging competition.