Image Source : AP Nvidia Corporation is an American multinational corporation and technology company headquartered in California.
US stock market: In a dramatic turn of events, chipmaker Nvidia experienced the largest single-day loss in US stock market history on Monday ( January 27). This came just a week after it was hailed as the most valuable publicly traded company. The tech giant saw its market value plummet by a staggering $600 billion. As per reports, this steep drop was triggered by the sudden rise of a new competitor in the artificial intelligence (AI) sector, DeepSeek — a China-based AI company that has quickly positioned itself as a serious rival to Nvidia.
DeepSeek, which has made headlines with its chatbot now available in both the Apple and Google app stores, has sparked concern among investors. As news of DeepSeek’s entry into the market spread, many investors rushed to sell off their Nvidia stocks, signalling growing anxiety over the new competition.
Industry reports reveal that DeepSeek’s AI model is not only cheaper than Nvidia’s, but it is also emerging as a serious competitor to established AI systems, including ChatGPT. While Nvidia has spent over $30 billion over the past decade developing its specialised chips for AI data processing, DeepSeek claims to have developed its AI model for under $6 million. This stark difference in investment has caused waves in the tech industry, raising questions about Nvidia’s future dominance in AI technology.
Nvidia, which has powered AI data with its high-end, AI-specific graphics processing units (GPUs), now faces competition from DeepSeek, whose more affordable AI model is quickly gaining attention. Major companies such as Meta and Amazon rely on Nvidia’s GPUs to train their own AI models. However, with DeepSeek’s affordable technology threatening to disrupt the market, Nvidia’s once unassailable position in the AI space is now under serious challenge.
What is DeepSeek?
DeepSeek’s AI assistant became the No.1 downloaded free app on Apple’s iPhone store Monday, propelled by curiosity about the ChatGPT competitor. Part of what’s worrying some US tech industry observers is the idea that the Chinese startup has caught up with the American companies at the forefront of generative AI at a fraction of the cost. The startup DeepSeek was founded in 2023 in Hangzhou, China and released its first AI large language model later that year.
Its CEO Liang Wenfeng previously co-founded one of China’s top hedge funds, High-Flyer, which focuses on AI-driven quantitative trading. DeepSeek began attracting more attention in the AI industry last month when it released a new AI model that it boasted was on par with similar models from US companies such as ChatGPT maker OpenAI, and was more cost-effective in its use of expensive Nvidia chips to train the system on huge troves of data. The chatbot became more widely accessible when it appeared on Apple and Google app stores early this year.
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