Tue, 28 Jan 2025

US tech stocks steady after DeepSeek AI app shock

DeepSeek's claim that its model was made at a fraction of the cost of its rivals has rocked the AI industry.

* US tech stocks stabilized on Tuesday after a sharp decline on Monday following the emergence of Chinese-made AI app DeepSeek, which claims to offer AI models at a fraction of the cost of its rivals.
* Nvidia's shares rose 8.8% on Tuesday, having plummeted 17% on Monday, as experts said the selloff may have been an overreaction.
* Analysts believe that DeepSeek's breakthrough could be a wake-up call for the US tech industry and may ultimately prove positive for the US.
* US President Donald Trump described the situation as "a wake-up call" but also said it was not a cause for concern, stating that if AI can be done cheaper and with similar results, it is a good thing for the US.
* DeepSeek's emergence has sparked concerns about the future of America's AI dominance and the scale of investments US firms are planning.
* The company behind DeepSeek, founded by Liang Wenfeng in 2023, claims its technology can be trained on 2,000 specialized chips compared to an estimated 16,000 for leading models.
* Experts say that if the cost of AI models becomes cheaper, it could accelerate the progress of AI and expand the market faster.
* However, some have cast doubt on DeepSeek's claims, including tech mogul Elon Musk.
* Cyber security concerns have also been raised due to the sudden explosion in popularity of DeepSeek.
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