China Reveals New Cheap Yet Powerful Open Source AI As Western Tech Monopolies Crash & Burn
Investors hammered technology stocks on Monday, sending the likes of Nvidia and Oracle plummeting, as the emergence of a low-cost Chinese artificial intelligence model cast doubts on Western monopoly dominance in this sector.
Startup DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of incumbent players' models, possibly marking a turning point in the level of investment needed for AI.
Futures on the Nasdaq 100 slid almost 4%, suggesting the index could see its biggest daily slide since September 2022 later on Monday, if those losses are sustained.
Those on the S&P 500 dropped 2%. Shares in AI chipmaker Nvidia fell more than 11%, rival Oracle dropped 8.5% and AI data analytics company Palantir lost 6.5% in pre-market trading.
DeepSeek, which by Monday had overtaken ChatGPT in terms of downloads on the Apple Store, offers the prospect of a viable, cheaper AI alternative which has raised questions about the sustainability of the level of spending and investment on AI by Western monopolies, including Apple and Microsoft.
"We still don’t know the details and nothing has been 100% confirmed in regards to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access," Jon Withaar, a senior portfolio manager at Pictet Asset Management, said.
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