Impact of Deepseek’s Entry on the AI Market
The recent emergence of Deepseek, a Chinese company, in the artificial intelligence market has sent shockwaves through the industry, particularly affecting American companies like Nvidia. The unexpected entry of Deepseek has led to a significant decline in Nvidia’s stock, with a fall of over 12% before the opening of Wall Street.
Consequences for the Technological Sector
The Nasdaq technological index, which includes many companies in the sector, also suffered a decline of over 4% according to future American markets. This loss scenario is not limited to Nvidia, as the main European markets also recorded strong setbacks. The Euro Stoxx 50, which groups the companies with the greatest capitalization of the continent, fell 1.22%, while other important markets like Frankfurt and Paris retreated 1.11% and 1.73%, respectively.
The Deepseek Revolution: The R1 Model and Its Effects
Among the most affected sectors in Europe is the technological sector, where companies like ASML, a Dutch machine manufacturer for chips, suffered a fall of over 8%. The market revolution is due to the launch of the IA R1 model, which quickly climbed to the top of free downloads in the app store in both China and the United States, surpassing the renowned OpenAi chatgpt. According to experts, the R1 competes directly with Openai’s GPT-4 model.
Characteristics of the R1 Model
One of the most outstanding characteristics of the R1 model is that it is open source, allowing any user to examine, modify, and customize its operation according to their needs. This model not only promises to democratize AI technology but also change the paradigm on how these systems are developed and marketed.
Effects on Financial Markets
Deepseek’s appearance not only impacted the technological sector but also influenced global markets. While the markets opt for red, investors take refuge in safe assets such as sovereign debt. This caused an increase in bond prices and a fall in their yields. For example, the ten-year bond yield dropped to 4.51%, while the German bond at ten years decreased to 2.50%.
Investor Reactions
Under this aspect, we can say that this movement reflects the search for stability by investors in a context of uncertainty. However, analysts warn that technological competition from China represents a complex challenge for Western economies.
The Future of a Business Model at Risk
According to Janus Henderson analysts, this progress doubts the need for multimillion-dollar investments planned by companies like NVIDIA in infrastructure and intellectual property. In addition, it questions the high valuations that were granted to the leading companies, based on accelerated growth expectations in the sector.
Challenges for Western Economies
For their part, income experts indicate that the efficient approach and low cost of Deepseek could threaten the American technological domain. This not only affects companies like NVIDIA but also the entire AI value chain, generating uncertainty among investors about the future of the sector.