In this article, the news about China’s DeepSeek causing a stir in tech markets and its potential impact on U.S. tech investors during earnings season is discussed. DeepSeek, an AI lab in Hangzhou, recently introduced a reasoning model called R1 that surpassed OpenAI’s latest model in various tests. The startup, founded in 2023, also launched a free, open-source large language model in late December, which was built in just two months with less than $6 million.
Despite skepticism, DeepSeek’s announcements led to concerns on Wall Street due to the implications of cheaper AI models arriving sooner. This resulted in a significant drop in Nvidia’s stock price by 17% on Monday, the largest one-day loss for a U.S. company. Other companies like Broadcom, Oracle, Dell, Super Micro Computer, and Hewlett-Packard Enterprise also experienced declines due to their association with Nvidia GPUs.
Tech giants like Meta, Microsoft, and Tesla are set to report quarterly results, with a focus on their investments in AI infrastructure, particularly in Nvidia’s GPUs. The impact of DeepSeek’s advancements on costs rather than revenue is a key topic for these companies during earnings calls.
Analysts are eager to see how DeepSeek’s developments will be addressed during earnings reports. Meta’s CEO Mark Zuckerberg highlighted plans to invest billions in AI infrastructure, while Microsoft, a major player in the AI sector, maintains a close relationship with OpenAI. Microsoft’s investments in GPUs for AI products and its Azure cloud service are significant.
Tesla’s CEO Elon Musk expressed doubts about DeepSeek’s low-budget claims but acknowledged its technical achievements. Musk, who is also involved in AI through his startup xAI, has been increasing AI spending at Tesla for self-driving cars. The rise of DeepSeek is seen as a positive development by some analysts, potentially leading to lower capital expenditures.
Apple, known for its conservative capital expenditures, has been less affected by the DeepSeek news. The company’s AI focus has been on Apple Intelligence, running on its own chips and integrating ChatGPT from OpenAI into Siri. Apple’s approach to AI differs from its competitors, with a focus on in-house development rather than cloud services.
Overall, the impact of DeepSeek’s advancements on the tech industry, particularly in AI, is being closely monitored by investors and analysts as companies navigate the evolving landscape of AI technologies and infrastructure.
