DeepSeek is changing the AI market: Apple wins and Nvidia suffers losses
By ForGeeks Chinese AI app DeepSeek has rocketed to the top of the App Store’s free app chart, resonating with the tech market. Unlike Nvidia, which lost billions on the app, Apple benefited by attracting new users to its ecosystem. What made DeepSeek so interesting to investors and why its low cost was a shock to the industry?
DeepSeek crashed Nvidia’s stock but gave Apple a boost
.
DeepSeek R1 uses a less resource-intensive model than rivals OpenAI and Google, allowing Chinese developers to cut its training costs by a factor of two. Jefferies estimates that the cost of building DeepSeek was just $5.6 million – less than 10% of Meta*‘s costs for Llama.
The app quickly became popular and displaced ChatGPT from the top spot in the App Store’s free app rankings. It caused tech companies’ shares to crash on the U.S. stock exchange. On Monday, Nvidia lost 17% of its capitalization, a whopping $593 billion, as investors feared that cheap AI models would undermine demand for its powerful (and expensive) GPUs. However, the company’s stock rebounded 8.9% on Tuesday, with analysts talking about how the market may have been too quick to jump to conclusions.
The company’s stock rebounded 8.9% on Tuesday, with analysts talking about how the market may have been too quick to jump to conclusions.
.
“Yesterday it was a panic reaction. Today, investors are wondering: did DeepSeek really build a quality model for such a modest amount of money? We need proof,” said J.J. Keenahan, president of brokerage tastytrade.
.
At the same time, Apple shares went up +3% on Monday and another +4% on Tuesday. On the back of DeepSeek’s success, its capitalization reached $3.58 trillion, while Nvidia is valued at $3.16 trillion after the fall.
Apple’s capitalization is now at $3.58 trillion.
Why does Apple benefit from DeepSeek’s success?”
.
Apple’s main advantage is that DeepSeek’s popularity attracts new users to the App Store, increasing the company’s revenue. If the Chinese AI model really does prove to be that effective, in the future it could even be run on iPhones without significant cost, strengthening Apple’s position in the AI race.
Apple’s main advantage in the AI race.
Nevertheless, Jefferies analysts note that so far, DeepSeek’s success has not had a significant impact on the AI smartphone market.
And so far, the company’s AI model has not had a significant impact on the AI smartphone market.
DeepSeek and politics: Chinese AI moves away from uncomfortable topics
Like other Chinese chatbots, DeepSeek is cautious when discussing politics and tends to avoid topics related to the actions of the Chinese government and the country’s leader, Xi Jinping.
DeepSeek is cautious when discussing politics and tries to avoid topics related to the actions of the Chinese government and the country’s leader, Xi Jinping.
Despite this, the app is generating a lot of interest in the international market. OpenAI chief executive Sam Altman called it “an impressive model.”
* Owned by Meta, it is recognized as an extremist organization in the Russian Federation and its activities are banned.
