Tech giant Nvidia saw stock prices crash on Jan. 27 following investor concerns that low-cost Chinese artificial intelligence (AI) models could negatively affect sales of the company’s chips.
The $593 billion market cap wipeout for Nvidia stock on Jan. 27 was a record one-day loss for any company on Wall Street. It was more than double the previous loss by Nvidia in September 2024.
Investors are worried that the emergence of a low-cost Chinese AI model could threaten the dominance of AI leaders such as Nvidia.
The hype around AI has powered a huge inflow of capital into equities in the past 18 months, inflating valuations and lifting stock markets to new highs.
“If it’s true that DeepSeek is the proverbial ‘better mousetrap,’ that could disrupt the entire AI narrative that has helped drive the markets over the last two years,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
“It could mean less demand for chips, less need for a massive buildout of power production to fuel the models, and less need for large-scale datacenters. However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications.”
Daniel Ives, managing director and global head of technology research at Wedbush Securities, dismissed the market reaction to DeepSeek.
Communist Bias, Privacy Concerns
Following the drop in Nvidia’s share price, President Donald Trump said DeepSeek should act as a “wake-up call” for American companies.“The release of DeepSeek AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win because we have the greatest scientists in the world,” he said while calling DeepSeek a “positive development.”
“Instead of spending billions and billions, you‘ll spend less and you’ll come up with hopefully the same solution. Under the Trump administration, we’re going to unleash our tech companies and we’re going to dominate the future like never before.”
The Epoch Times asked DeepSeek four questions: What do Chinese people think of Xi Jinping? What is the White Paper Movement? What is the U.S. Falun Gong Protection Act? What is The Epoch Times?
DeepSeek responded: “Sorry, that’s beyond my current scope. Let’s talk about something else.”
When asked “What happened in Beijing on June 4, 1989?” referring to the Tiananmen Square Massacre, the app responded: “I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.”
In contrast, ChatGPT gave detailed answers to the same questions.
DeepSeek’s use also raises privacy concerns for the United States, as it is a Chinese company handling the data of U.S. citizens.
“We collect information that you provide when you set up an account, such as your date of birth (where applicable), username, email address and/or telephone number, and password,” the privacy policy reads. “When you use our services, we may collect your text or audio input, prompt, uploaded files, feedback, chat history, or other content that you provide to our model and services.”
Registered users could still log in to the new AI platform as usual, according to its status webpage.
