Chinese app DeepSeek hammers US tech stocks with cheaper open-source AI model
Published On Jan 27, 2025, 7:44 AM
The Chinese AI app DeepSeek has gained significant traction, being downloaded 1.6 million times in the U.S. in January alone. Its open-source nature allows developers to build upon it, making it a competitor to established AIs like OpenAI's ChatGPT but at a lower cost. DeepSeek's recent model, R1, has achieved top performance rankings with fewer resources than its U.S. counterparts. This rapid progress has led to market reactions, particularly affecting shares of companies like Nvidia, known for their AI chips, as traders express concern over increased competition.
Stock Forecasts
NVDA
Negative
DeepSeek's competitive pricing and feature set may pressure traditional tech companies, especially those reliant on expensive chips. This could lead to further sell-offs or decreased valuations in the sector.
GOOGL
Positive
Despite the competition from DeepSeek, leading AI firms like OpenAI and Google are still seen as having superior technology. Their stocks may stabilize in the long term as they advance their proprietary capabilities.
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