Nvidia and ASML shares plunge amid DeepSeek AI breakthrough
DeepSeek rise in AI sparks market shakeup for Nvidia and ASML
Shares of Nvidia Corp. and ASML Holding NV plunged on Monday as the Chinese AI startup DeepSeek showcased its latest model, posing a competitive threat to Western AI giants.
Nvidia shares fell nearly 9% in premarket trading, while ASML’s stock dropped 11% in Amsterdam, marking its steepest decline since October 2022. Nasdaq 100 futures also slumped, reflecting investor unease over the disruption to the AI hardware market, reports Bloomberg.
DeepSeek, whose AI assistant recently became the top-rated free app on Apple's App Store, has demonstrated performance comparable to OpenAI’s and Meta’s cutting-edge models. Unlike its Western counterparts, DeepSeek claims to have achieved similar results at a fraction of the cost, raising questions about the viability of the current AI hardware-intensive business model.
Jefferies analysts warned that DeepSeek’s success could significantly disrupt AI industry norms, as its efficiency-focused approach reduces reliance on high-end chips and extensive computational power.
Pressure Mounts on Nvidia and ASML
Nvidia and ASML, two key players in the AI supply chain, have benefited greatly from the AI boom. Nvidia’s GPUs are central to AI training, while ASML’s lithography machines are vital for producing advanced semiconductors.
Both companies have profited from surging investments in AI infrastructure, including Meta’s $65 billion capital expenditure plan and the $100 billion Stargate joint venture by OpenAI, SoftBank, and Oracle.
However, DeepSeek’s success suggests Chinese engineers have circumvented U.S.-led export restrictions on high-end semiconductors. The Biden administration has imposed strict controls on chip exports to China, limiting Nvidia’s AI chip sales and barring ASML from selling its most advanced lithography machines to the country.
DeepSeek’s rise signals a potential shift in the AI landscape, challenging Western dominance and highlighting the need for greater efficiency in AI development. For Nvidia and ASML, the startup’s efficiency-first approach could dampen demand for their cutting-edge products, forcing a reevaluation of growth projections in the AI hardware market.
Earlier, Chinese startup DeepSeek has shaken up the artificial intelligence landscape by surpassing ChatGPT to become the top-rated free app on Apple's App Store in the United States.
