Nvidia (NVDA, Financial) shareholders watch after Tuesday's historic bounce and a 5% tumble Wednesday morning as investors wrestle with the disruptive capabilities of China's DeepSeek.Microsoft (MSFT, Financial), and Tesla (TSLA, Financial) each slid some 1%, but the U.S. tech sector remained under pressure.
DeepSeek's shockingly efficient AI model is what is causing the turmoil, robbing U.S. firms like OpenAI and Nvidia of their iron grip. DeepSeek trained its model using the outputs from OpenAI, which is possibly in breach of legal terms with the potential for big legal ramifications. White House AI official David Sacks also warned of ‘copycat models' eating up American AI leadership, while Nvidia stock, in the red nearly 10 percent from last week, fails to lift off.
Making things even more volatile, Alibaba's latest AI model beat DeepSeek OpenAI and Meta in key benchmarks. Analysts are split; meanwhile, with Morgan Stanley slashing Nvidia's price target, pointing to deflationary risks in AI, while others are sure the panic is overblown.
Markets are on edge, waiting on Big Tech earnings and a few geopolitical tensions. DeepSeek's ascent marks a revolutionary moment for AI, one that will shake up the presumption that U.S. players will set the playbook for the industry.
