DeepSeek's AI Shakes Global Tech Stocks

  • Publish date: Tuesday، 28 January 2025

Low-cost Chinese AI model sparks valuation rethink as tech selloff deepens.

DeepSeek's AI Shakes Global Tech Stocks
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A seismic shift hit global tech markets this week as Chinese startup DeepSeek unveiled a groundbreaking low-cost AI model, shaking investor confidence in the once-dominant AI players. The announcement triggered a major selloff in technology stocks worldwide, raising questions about sky-high valuations in the industry.

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The Numbers Behind the Tech Selloff

The ripple effects began on Monday when Nvidia, the poster child of the AI boom, saw its stock nosedive 17%, wiping out $593 billion in market value—a record one-day loss for any company. This selloff quickly spread to global markets, with the Philadelphia Semiconductor Index dropping 9.2%, its sharpest decline since 2020.

In Japan, major players like Advantest and Tokyo Electron fell 10% and 5%, respectively, while SoftBank Group, known for its tech investments, also slid by 5%. Meanwhile, US tech giants like Broadcom, Microsoft, and Alphabet saw significant losses, fueling fears of a broader market correction.

DeepSeek’s Disruption

DeepSeek, a Hangzhou-based startup, has stunned the industry with its low-cost AI model, reportedly developed for less than $6 million using Nvidia's lower-capability H800 chips. The model’s efficiency and affordability have flipped the narrative on Chinese AI innovation, which has often been perceived as lagging behind the US.

Even OpenAI CEO Sam Altman acknowledged its potential, calling it "an impressive model" while expressing excitement over the fresh competition. US President Donald Trump referred to DeepSeek as "a wake-up call for our industries," emphasizing the need for American companies to innovate at a faster pace.

Investor Jitters and Economic Impacts

The emergence of DeepSeek has highlighted vulnerabilities in the global AI market, where lofty valuations and concentrated investor portfolios leave little room for error. David Bahnsen, CIO at The Bahnsen Group, pointed out that Monday’s selloff was a "jarring reminder" of the risks tied to overvalued tech stocks.

The fallout extends beyond chipmakers. Datacenter operators like Malaysia’s YTL Power also faced losses, with the company dropping 9% on Tuesday. Analysts say this could push investors toward off-plan tech ventures with flexible growth potential.

The Road Ahead

DeepSeek’s success story has sparked a race to uncover more details about the company and its impact on global AI dynamics. As of now, its controlling shareholder is Liang Wenfeng, co-founder of the hedge fund High-Flyer, and its cutting-edge AI model is reshaping how the world views Chinese technological capabilities.

Japan’s digital minister Masaaki Taira noted that DeepSeek’s rise challenges the assumption that Chinese generative AI lags behind. “This could be a significant moment for cost-efficient AI,” Taira said, indicating that Japan is reevaluating its strategies in light of DeepSeek’s disruptive entry.

What’s Next for Tech Giants?

All eyes are now on upcoming tech earnings reports, where executives will be tasked with calming investor nerves and outlining strategies to maintain their dominance. With DeepSeek’s model proving to be a game-changer, the global AI race has just entered a new phase—one where innovation and cost efficiency may trump legacy dominance.


This shakeup is a reminder that in the fast-moving world of AI, even the most established players must stay ahead of the curve. As DeepSeek continues to disrupt the landscape, one thing is certain: the AI competition has only just begun.

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