AI Disruption: China's DeepSeek Challenges Tech Titans

The emergence of China's low-cost AI model, DeepSeek, has disrupted global tech markets, triggering a notable sell-off. Shares of leading AI firms like Nvidia dropped sharply before showing some recovery, as investors reevaluated AI valuations amidst skepticism on DeepSeek's claims. Major tech companies brace for further market impacts.

Global technology stocks took a nosedive this week following the introduction of a cost-effective Chinese AI model by startup DeepSeek. The unexpected entry has sparked investor unease, leading to a sharp decline in shares of AI giant Nvidia, which saw a record $593 billion market valuation loss in just one day.

By Tuesday, there was a slight rebound with Nvidia's shares rising 6% in Frankfurt and Oracle and Palantir posting modest gains, while European tech stocks continued to struggle. DeepSeek's free AI assistant, touted for its efficiency, has drawn international attention, despite ongoing doubts regarding its cost-effectiveness.

The market upheaval underscores broader concerns over the inflated valuations of tech companies heavily invested in AI, as well as the precariousness surrounding investor commitments to these stocks. As some of the largest tech companies prepare to release earnings reports, industry leaders are under pressure to address looming concerns.

(With inputs from agencies.)