DeepSeek and its impact on markets and the technology sector
Chinese startup DeepSeek is fundamentally changing the dynamics of the global technology sector. Its new artificial intelligence (AI) model, which is more efficient and less costly, is disrupting the dominant approaches of Silicon Valley. This development has caused futures on US technology indices to fall, while Chinese technology stocks have seen a sharp rise.
Main impacts and market reactions
1. The rise of Chinese technology stocks:
- The Hang Seng Index rose 2%, with shares of DeepSeek-related companies such as Merit Interactive Co. hitting daily highs.
2. Decline in U.S. technology stocks:
- Nasdaq 100 and S&P 500 futures fell 1.9% and 1%, respectively.
- Nvidia Corp. fell more than 3% on the alternative trading system Blue Ocean, while its supplier Advantest Corp. lost 8.6%.
3. Rethinking AI cost-effectiveness:
- DeepSeek shows that powerful AI can be developed at significantly lower costs, challenging the traditional capital-intensive approaches of companies like Nvidia or Meta Platforms.
Key features of the DeepSeek model
- Efficiency: the model runs on fewer powerful chips, reducing the cost of operation.
- Transparency: Users appreciate the model's ability to show the logic and decision-making process.
- Rapid adoption: the DeepSeek app has become the number one app in both Apple's App Store and Alphabet's Android Play Store.
Notable testimonials and reviews on the Android App Store and the Android App Store on the Android App Store
- Marc Andreessen called DeepSeek "one of the most amazing breakthroughs in AI."
- Nirgunan Tiruchelvam (Aletheia Capital): "DeepSeek is changing the view of AI as a field requiring massive investment and computing power."
Outlook for markets and technology companies
1. US tech giants under pressure:
- Earnings growth for companies like Apple and Microsoft is expected to slow, which could negatively impact their valuations.
- The Nasdaq 100 is trading at 27 times forward earnings estimates, above its three-year average.
2. China is strengthening its position in AI:
- Startups such as DeepSeek are proving that China has the ability to compete with Silicon Valley in the technology field.
- The rise of Chinese tech stocks indicates a shift of capital towards Asian markets.
3. Future challenges:
- This week's earnings releases by major technology companies will be key to the markets going forward.
- The question remains whether firms focused on expensive AI technologies can adapt to new competition.
DeepSeek may thus be the beginning of a broader change in the technology sector that challenges current approaches to artificial intelligence.
The market is terribly volatile right now, but it has opened up some opportunities. I've been overbought Google even though their stock hasn't been touched much.
I don't like China much, but they did this. In the end, this should be good news for $META or $AAPL as they won't have to incur such costs and with the DeepSeek model, they'll have it cheaper.
I actually find the whole thing just interesting. It's nice to see how fragile the market is right now. It only takes one thing to change everything. But these are the opportunities that many have been waiting for. The sell-off, especially on NADAQU, was just over the line.