US Tech Stocks Rebound After DeepSeek Incident
US tech stocks rebounded on Tuesday after a sharp drop due to the emergence of the Chinese-made AI app DeepSeek. Nvidia’s shares rose over 6% after Monday’s slump, with experts deeming the sell-off an over-reaction.
DeepSeek’s claim of producing AI models at a fraction of the cost of its rivals raised questions about America’s AI dominance and the scale of investments by US firms. President Trump called it a “wake-up call” for the US tech industry but also noted the potential benefits of cheaper AI development.
The rise of DeepSeek, the most downloaded free app in the US, coincides with US-China tech race tensions, with China experimenting to create more efficient and cost-effective AI models. Nvidia, a leader in AI investments, suffered a 17% share price drop on Monday, reflecting fears of a possible AI bubble.
- Experts like Janet Mui expect companies like Apple to benefit from cheaper AI models, potentially benefiting other tech giants as well.
- Despite the initial shock to the markets, the Dow Jones, S&P, and Nasdaq indexes were steady, while the FTSE 100 in the UK closed higher.
- In Asia, Japanese AI-related firms saw a decrease in shares, impacting the Nikkei 225.
DeepSeek’s Impact on the AI Industry
Despite concerns, DeepSeek founder Liang Wenfeng remains optimistic about the performance and pricing of the company’s AI model. The lower cost of DeepSeek could lead to wider adoption of AI in businesses, accelerating progress in the industry. However, some, including Elon Musk, have cast doubt on DeepSeek’s claims, raising cyber security concerns. Overall, the emergence of DeepSeek signals a potential shift in the AI industry, impacting both US and Chinese tech markets.
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