With the stock market dominated by US tech companies focused on AI, is DeepSeek's competitor to OpenAI about to brings things crashing down? The post Is DeepSeek about to cause a stock market crash? appeared first on The Motley Fool UK.

I think we’re about to get a crash in 5 hours folks

The companies known as the Magnificent Seven make up over 20% of the global stock market. And a lot of this is based on their perceived advantage when it comes to artificial intelligence (AI).

The big US tech firms hold all the aces when it comes to cash and computing power. But DeepSeek – a Chinese AI lab – seems to be showing this isn’t the advantage investors once thought it was.

DeepSeek doesn’t have access to the most advanced chips from Nvidia (NASDAQ:NVDA). Despite this, it has built a reasoning model that is outperforming its US counterparts – at a fraction of the cost.

Investors might be wondering about how seriously to take this. But Microsoft (NASDAQ:MSFT) CEO Satya Nadella is treating DeepSeek as the real deal at the World Economic Forum in Davos:

“It’s super impressive how effectively they’ve built a compute-efficient, open-source model. Developments like DeepSeek’s should be taken very seriously.”

Whatever happens with share prices, I think investors should take one thing away from the emergence of DeepSeek. When it comes to AI, competitive advantages just aren’t as robust as they might initially look.

  • JohnBrownsBussy2 [she/her, they/them]@hexbear.netEnglish
    29·
    3 天前

    A big indicator of market volatility/panic, the VIX index, is up 40%.

    Right now, it’s around 21. For comparison, it peaked at 70 during the '08 crash, and 53 in '20 covid crash, so there might be a ways to go for this movement to translate into a generalized stock market crash.