Just a few days ago, no one had ever heard of DeepSeek. Now the Chinese lab and its new artificial intelligence model are the only things anyone seems to care about. 

It’s the top download in Apple’s app store, and Wall Street is in a panic. The U.S. stock market saw hundreds of billions of dollars erased in early trading Monday. Investors got cold feet after DeepSeek, a relatively small company with a few hundred employees, reportedly built an AI model that outperformed OpenAI’s ChatGPT and other American competitors—created at less than 1 percent of the cost.

“The initial reaction has been a selloff without really knowing the true threat that this is,” said Jay Woods, chief global strategist for Freedom Capital Markets. 

Investors this morning, he explained, are opting to sell first and ask questions later.

The big question is whether DeepSeek really did build its technology with less than $6 million in capital. Remember, it was only last week that President Trump announced a $500 billion AI initiative led by OpenAI. 

Nvidia, which has been the stock market’s dominant AI pick for two years, wiped out 12 percent—nearly half a trillion dollars in market capitalization—within minutes after trading kicked off. 

DeepSeek just erased $400 billion from Nvidia.

Fear has returned to the stock market. $NVDA pic.twitter.com/gY0BbwLNO3

— Phil Rosen (@philrosenn) January 27, 2025

Chip, AI, and energy companies, as well as members of the Magnificent 7, also tanked. Here’s how key stocks traded as of 10:45 a.m. ET:

  • Microsoft, -2.92 percent
  • Amazon, -2.34 percent
  • Tesla, -1 percent
  • Broadcom, -11.4 percent
  • Arm, -7.43 percent
  • Constellation Energy, -17.64 percent
  • Vistra, -25.49 percent
  • Micron Technology, -9.45 percent

To Mark Malek, chief investment officer at Siebert, the knee-jerk reaction in the market presents a buying opportunity. While it’s possible that DeepSeek did find and create a cheaper, more efficient way to build an impressive AI model, that in his view is a net positive for its American rivals. 

“You can count on the incumbents to adopt any new techniques found, no matter who finds them,” Malek said. “It is the basis for a competitive and rich market.” 

Anthony Pompliano, the CEO of Professional Capital Management, agrees. In a letter to investors Monday, he cited Jevons paradox, which states that when a resource increases in efficiency, it creates an increase in consumption of that resource, not a decrease.

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Source : https://www.inc.com/phil-rosen/deepseek-stock-market-outlook-nvidia-trump-ai-artificial-intelligence-tech/91139581