Artificial intelligence company, DeepSeek is having a massive impact on tech stocks.
All after the one-year-old startup “presented a ChatGPT-like model called R1, which has all the familiar abilities operating at a fraction of the cost of OpenAI’s, Google’s, or Meta’s popular AI models,” says CNN. “The company said it had spent just $5.6 million training its newest AI model, compared with hundreds of millions or billions of dollars US companies spend on their AI technologies.”


Also, according to Bloomberg, “DeepSeek’s success may push OpenAI and other US providers to lower their pricing to maintain their established lead. It also calls into question the vast spending by companies like Meta and Microsoft Corp. — each of which has committed to capex of $65 billion or more this year, largely on AI infrastructure — if more efficient models can compete with a much smaller outlay.”
All of which had a massive, negative impact on tech stocks, like Nvidia, Advanced Micro Devices, Microsoft, Cisco… the list goes on. However, we don’t expect for the weakness to last too long – especially after analysts at Citi pointed out that US companies still maintain a substantial advantage thanks to sophisticated chips.
Investors should also use weakness in Broadcom, Meta, IBM, Cisco, Nvidia, and Alphabet. But, wait for each stock to find a bottom first instead of trying to catch a falling knife.
Sincerely,Ian Cooper
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