The artificial intelligence industry has been shaped by the speedy abilities of its products, but the industry is being required to show agility as a disruptor disrupted the disruptors.
The apparent overnight success of Chinese AI startup DeepSeek caused a shock to the industry, especially the Silicon Valley innovators who have been firmly in the driving seat of this latest tech boom. It also led to a shock for the equity markets, although strategists said it was unlikely to have a long-term impact.
President Trump said the firm’s R1 release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”
Nvidia, the chipmaker that has been a key focus for investors increasing exposure to the AI market, saw its shares plummet Monday, ending the session down 17%, erasing almost $600 billion from its market cap, the worst one-day fall for any company in history, and toppling its position as the world's most valuable company in favor of Apple and Microsoft.
In a bid to shore up confidence Nvidia issued a statement praising DeepSeek’s “excellent AI advancement” and highlighting how it would require “significant numbers of NVIDIA GPUs and high-performance networking.”
OpenAI’s Sam Altman also worked from the same playbook, welcoming DeepSeek as a competitor with a post on X noting the Chinese firm’s “impressive model, particularly around what they’re able to deliver for the price.”
The Nasdaq got $1 trillion haircut with a 3% decline, although some AI-related stocks recovered some losses later in the session.
Tech experts have been hailing the abilities of DeepSeek and how it is offering for free what rivals including ChatGPT charge for – at least for now.
But the sudden interest proved challenging for the startup platform as downloads of its app surged in the US and globally, putting it at the top of Apple’s App Store downloads chart. There was an outage of more than an hour as DeepSeek’s systems were strained, with the company then limiting access citing “large-scale malicious attacks” on its infrastructure.
But if you shoot at a king, you have to kill him. And there’s no suggestion that DeepSeek is going away and it is already changing how some view investing in the AI space, but Garry Tan of US venture capital firm Y Combinator, which invests in AI startups, says dumping tech stocks is a panic reaction and faster platforms should be welcomed.
“Training costs coming down and capabilities going up will create demand, not reduce it,” he wrote, adding that the success of DeepSeek will fuel more AI startups. “A thousand flowers will bloom!”
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