US Technology companies received a major blow from the Chinese AI company DeepSeek after the company rolled out their GenAI R1 at much lower prices. On Monday, i.e. 27th of January, Nvidia lost close to $593 billion in market value, approximately 17% of its share value. Moreover, semiconductor, power, and infrastructure companies collectively shed more than $1 trillion.
DeepSeek is a Chinese startup that has claimed its AI model is at par with OpenAI’s flagship product, ChatGPT, and it has been developed at a fraction of the data and cost. Though there is skepticism about cost, the news etched a deep cut on the US share market.
However, on the 28th of January, the technology shares gained some ground. Nvidia surged 8.9% as investors seized buying opportunities following the previous day’s record-breaking decline, triggered by concerns over a low-cost Chinese AI model potentially challenging U.S. competitors. The broader technology sector rebounded with a 3.6% rally on Tuesday after a 5.6% decline the previous day. Similarly, the Philadelphia Semiconductor Index gained 1.1% following a 9.2% drop in the prior session. Further, Broadcom, another chip heavyweight, gained 2.6% after dropping 17.4%.
