The emergence of a new artificial intelligence tool in China.
NAS 100 – Daily Chart
The NAS 100 has slumped to test the previous all-time high from July. Dip buyers emerged early and that will be the key barrier to avoid a move lower toward the 18,500 mark. A new application has topped Apple’s app store this week and rattled the U.S stock market. DeepSeek, an AI app developed by a Chinese hedge fund manager, has beaten ChatGPT to the top spot.
The performance figures of DeepSeek, and the R1 AI model that supports its chatbot, has investors questioning the dominance of the West in the new technology. The news comes after U.S. venture Stargate said it would spend as much as $500 billion on AI infrastructure over the next four years. Silicon Valley investor Marc Andreessen described DeepSeek-R1 as “AI’s Sputnik moment,” a reference to the start of the Space Race.
“They were super-efficient in building the model. Instead of using some 16,000 chips to train the chatbot, they used 2,000. That’s impressive. Silicon Valley must be in a panic,” said an AI philosopher at the University of Oxford in England.
The success of DeepSeek which is now a real threat to its American competitors has surprised many. The belief had been that bigger was better in order to train an AI syste, and the latest tool must call into question the huge CAPEX spend that U.S. tech firms have committed to in AI chips and data centers. It is also a threat to companies such as Nvidia.
The Nasdaq 100 lost more than 2% in early trading before dip buyers emerged. Market heavyweight Nvidia was an early loser, down more than 12%. Companies such as Oracle are also lower at -8%. Both of those companies were beneficiaries of demand for data centers and chips.
There is a real risk of further correction in the tech market this week as investment firms will be racing to adjust their analysis for valuations in the chipmaker stocks.
