The success of Chinese company DeepSeek’s low-cost AI model has sparked a major reaction in global markets, with shares of Japanese technology companies falling. This decline came after DeepSeek’s AI assistant app gained worldwide attention, claiming to use less data at a fraction of the cost of current services.
Nvidia, the poster child of the AI boom in recent years, saw a 17% drop on Monday, wiping out $593 billion from its market value. The ripple effect was felt globally, affecting tech stocks from Japan to Silicon Valley.
AI Race and Investor Reaction
The growing concerns in the market center around whether such massive investments in AI are justified, now that more cost-effective and efficient Chinese alternatives are entering the scene. Japan’s Digital Minister, Masaaki Taira, acknowledged that Chinese AI technology has caught up much faster than expected and investors worldwide are reconsidering the impact of these low-cost models on Japanese and U.S. companies.
