Nvidia’s stock took a hard nosedive of 17% in just one day, kicking off the week with a bang that no one saw coming. Wall Street was in a tizzy on Monday, and the culprit?
A debut from a Chinese open-source AI startup named DeepSeek, which has everyone wondering that the internet might not need those speedy chips after all.
Blood on the streets
Nvidia’s stock plummeted from $142 to $124 per share in mere minutes, and it didn’t stop there, the stock continued its downward spiral until it found some support around the $118 level.
And it wasn’t just Nvidia feeling the heat, because Taiwan Semiconductor also took a hit, dropping 14%, while Broadcom fell by 17%.
Newer, cheaper, better?
So, what’s got everyone in a frenzy? DeepSeek, the new kid on the block, has been making noise by surpassing ChatGPT in app downloads on the Apple App Store.
This startup is following an open-source model, claiming it can deliver similar services to ChatGPT but at a fraction of the cost. Quite a big deal, let me say this.
Creative disruption
Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, weighed in on this chaotic situation.
He pointed out that if DeepSeek really is the better mousetrap, it could shake up the entire AI sector that’s been boosting markets for the past couple of years.
Jacobsen noted that this could lead to decreased demand for chips and less need for extensive power production to support AI models.
Plus, we might not need those massive data centers as much anymore. He also suggested that this shift could make AI more accessible and spark a new wave of innovative applications.
Either way, Nvidia’s pretty dramatic plunge is shaking things up across the semiconductor industry, and all eyes are now on DeepSeek to see if it truly lives up to the hype.
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