Connect with us

Hi, what are you looking for?

Economy News

AI Stocks Decline Amid DeepSeek’s Emerging AI Model

On January 27, 2025, U.S. stock markets experienced notable fluctuations as investors anticipated the Federal Reserve’s forthcoming interest rate announcement. The S&P 500 index decreased by 1.5%, primarily due to a significant downturn in technology stocks, while the Nasdaq Composite saw a more substantial decline of 3.1%. In contrast, the Dow Jones Industrial Average managed a modest gain of 0.7%. 

A key factor contributing to the tech sector’s decline was the emergence of a new AI application from Chinese startup DeepSeek. This application has surpassed OpenAI’s ChatGPT on Apple’s platform, leading to concerns about the profitability of existing AI market leaders. Consequently, several AI-related stocks faced notable losses:

Nvidia Corporation: The semiconductor giant’s stock plummeted nearly 17%, resulting in a record $589 billion loss in market capitalization.  Broadcom Inc.: Experienced a decline of approximately 8.9%.  Microsoft Corporation: Shares fell by around 4%.  Alphabet Inc. (Google’s parent company): Saw a decrease of over 4%. 

DeepSeek’s AI model, developed at a fraction of the cost compared to its U.S. counterparts, has raised concerns about the future profitability of established AI companies. The model was built without top-tier foreign processors restricted by U.S. export curbs, reportedly costing under $6 million to develop. This contrasts with the billions spent by U.S. firms like OpenAI and Meta Platforms. 

Despite the downturn in technology and AI sectors, other industries demonstrated resilience. Notably, American Water Works, AT&T, and HCA Healthcare reported gains, buoyed by positive financial reports and strategic initiatives.

Investors are now closely monitoring the Federal Reserve’s forthcoming decisions, as well as developments in the AI industry, to assess potential impacts on the broader market.

The post AI Stocks Decline Amid DeepSeek’s Emerging AI Model appeared first on FinanceBrokerage.

You May Also Like

Investing News

A short squeeze is a situation where a heavily shorted company goes parabolic, leading to substantial losses among short-sellers. This situation happens when a...

Investing News

A bull market is the best period in the financial market both for traders and investors alike. It is a period when most financial...

Investing News

In order to succeed as a day trader, people need to choose a good trading strategy, but this isn’t always enough to make things...

Investing News

Financial markets are not predictable, and traders aren’t either! In day trading, as in any other job, the human factor plays a significant role....