Technology stocks tumbled last Monday, led by a 17% decline in NVIDIA NVDA shares, as investors weighed the implications of a new AI model released by Chinese start-up DeepSeek. The model has raised concerns about the tens of billions of dollars being spent by U.S. tech giants.
However, some experts believe DeepSeek is using more NVIDIA chips than it has disclosed and is also spending significantly more than reported. Many suspect the company may have leveraged U.S. model outputs to enhance its own models.
Microsoft MSFT and OpenAI are investigating whether DeepSeek used data from OpenAI’s models without authorization to train its own models via distillation.
While it is too early to assess the full implications, this development could ultimately benefit many companies, particularly AI users. If AI costs decline, leading to its commoditization, we could see more widespread adoption.
Investors have been evaluating potential winners and losers in the wake of DeepSeek’s emergence, leading to some rotation in the technology sector and broader markets.
Companies developing AI applications, as well as those integrating AI into their products and services to enhance productivity—such as software firms, banks, healthcare providers, and industrial companies—could be major beneficiaries as AI becomes more affordable and accessible.
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