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U.S. technology stocks fell Monday after the popularity of Chinese AI startup Deepseek raised concerns among investors about U.S. dominance in the sector.
The tech-heavy Nasdaq composite plunged more than 2.6% in early trading. The Dow Jones industrial average fell more than 100 points and the S&P 500 fell more than 1.5%.
Deepseek is attracting attention in Silicon Valley as the company appears to nearly match the capability of chatbots like Openai’s chatppt, but at a fraction of the development cost.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:comp | NASDAQ Composite Index | 19394.445719 | -559.86 |
-2.81% |
| I:DJI | Dow Jones makes the averages | 44296.98 | -127.27 |
-0.29% |
| SP500 | S&P 500 | 5997.07 | -104.17 |
-1.71% |
NVIDIA shares were hit the hardest, falling more than 11% and dragging down other tech companies. ARM and advanced micro device holdings were 8% and 5.5% lower, respectively. Microsoft shares slipped 3.5%.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | Nvidia Corp. | 125.12 | -17.50 |
-12.27% |
| ARM | Arm Holdings plc | 151.40 | -11.12 |
-6.84% |
| AMD | Advanced Micro Devices Inc. | 122.84 | -0.20 |
-0.16% |
| MSFT | Microsoft Corp. | 428.83 | -15.22 |
-3.43% |
Deepseek has increased In popularity in global app stores since the app’s release earlier this month, having been downloaded 1.6 million times on January 25 in the United States and ranking No. 1 in app stores. iPhone apps in Australia, Canada, China, Singapore, the United States and the United Kingdom, unlike Chatgpt and other major AI competitors, Deepseek is open-source, allowing developers to ‘offer their own improvements on the software.
The company unveiled R1, a specialized model designed for solving complex problems, on January 20, which “zoomed towards the world’s top 10 in performance”, and was built much faster, with less powerful AI chips , at a much lower cost than other American models, According to the Wall Street Journal.
Meta’s Chief AI Scientist, Yann LeCun, took to social media to talk about the app and its rapid success.
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A Chatbot application developed by Chinese AI company Deepseek (Getty Images / Getty Images)
He emphasized In a post on threads, That what stood out most to him about Deepseek’s success was not the increased threat created by Chinese competition, but the value of keeping AI models open source, so that everyone could benefit from them.
“It’s not that China’s AI is ‘outpacing the United States,’ but rather that ‘open source models are outpacing the United States,’” LeCun explained.
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In this photo illustration the OpenAI logo is seen displayed on a mobile phone screen with the Chatgpt logo in the background. (Photo illustration by idrees abbas / sopa images / lightrocket via Getty Images / Getty Images)
Experts told the magazine that Deepseek technology is still behind Openai and Google. However, it is a close rival despite using fewer and less advanced chips, and in some cases skipping steps that American developers consider essential.
On Saturday, the Journal reported that both Deepseek models were ranked in the top 10 on Chatbot Arena, a platform curated by researchers at the University of California, Berkeley who evaluate Chatbot performance.
Signage outside Meta’s headquarters in Menlo Park, California, Thursday, February 1, 2024. (Photographer: David Paul Morris/Bloomberg via Getty Images/Getty Images)
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Although Deepseek’s flagship model is free, the Journal reported that the company facilitates users linking their own applications to Deepseek’s model and IT infrastructure.
Stepheny Price of Fox Business contributed to this report
