Nvidia Lost $600B In Market Cap After DeepSeek Deployed a Low-Cost, High-Quality AI Model

IBL News | New York

The Chinese upstart DeepSeek sparked a freakout in Wall Street after proving that an advanced AI model can be deployed without the most advanced gear provided by Nvidia and others. As a result, investors suddenly started questioning the outlook for AI spending.

On Monday, Nvidia lost $600 billion in market cap after tumbling 17%, while tech-heavy Nasdaq Composite sank 3.4%. Microsoft and Google parent Alphabet both fell more than 2.5%. The Bonds climbed as investors sought safety.

Since DeepSeek released an open-source version of its reasoning model R1 at the beginning of last week, many in the tech industry have praised what the company achieved and what it means for AI.

Venture capitalist Marc Andreessen, for example, posted that DeepSeek is “one of the most amazing and impressive breakthroughs I’ve ever seen.”

Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen — and as open source, a profound gift to the world. 🤖🫡

— Marc Andreessen 🇺🇸 (@pmarca) January 24, 2025

R1 seemingly matches or beats OpenAI’s o1 model on certain AI benchmarks.

The Chinese company claimed one of its models only cost $5.6 million to train, compared to the hundreds of millions of dollars that leading American companies pay to train theirs.

DeepSeek’s iOS app is now #1 on the “Top Free Apps” chart in Apple’s App Store in the US, just ahead of ChatGPT