DeepSeek, the hottest name in artificial intelligence, took a Chinese hammer to several tech companies on Monday, with Microsoft, Google and especially Nvidia seeing their stock prices take a noticeable hit.
If you missed it, DeepSeek climbed to the top of Apple’s App Store this weekend — surpassing OpenAI’s ChatGPT — after releasing its R1 and R1-Zero models. DeepSeek, founded by Chinese entrepreneur Liang Wenfeng, quickly shook up the tech world — which you can read more about by clicking here — and spurred a Wall Street sell-off for several AI-focused companies, such as:
— Microsoft, OpenAI’s chief partner, dropped 2.14%
— Alphabet, Google’s parent company that has its own AI model, Gemini, dropped 4%
— Tesla, which uses AI for its FSD (full self-driving) technology, declined 2.32%
— Nvidia, which makes GPUs (Graphics Processing Units) and chips that are the backbone of many AI applications, saw its stock price crater 16.86%. The Santa Clara-based company was the world’s most valuable company last Thursday, but has since dipped to third place, behind Apple and Microsoft, with a $2.9 trillion market cap when market’s closed on Monday.
Notably, Meta — the parent company of Facebook and Instagram — avoided the dip; Meta’s stock price increased 2.2% on Monday. Like DeepSeek — and unlike ChatGPT and Gemini — the company’s Llama AI model is open-source. Meta CEO Mark Zuckerberg also announced last Friday the company would be spending $60 billion-$65 billion this year to enhance its AI efforts.
The sell-off is likely due to fears that China has caught, or even surpassed, America in the AI arms race (remember, China’s communist government is closely tied to every one of the country’s tech companies, including ByteDance, TikTok’s parent). On Monday, the S&P 500 dropped 1.46% and the Nasdaq 3.07%.
Marc Andreessen, co-founder of the tech-focused Andreessen Horowitz venture capital firm, even called DeepSeek AI’s “sputnik moment” on Sunday.
However, Wedbush managing director Dan Ives, during an interview with CNBC on Monday afternoon, said he does not view DeepSeek’s emergence as a death sentence for the established American players in AI.
“In my view, it’s a top three buying opportunity that I’ve seen in the last decade for tech,” Ives said. “I think the Street and the market got this way wrong. In no way does this dent our bull thesis.”
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