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Yesterday, Wall Street was rattled by the debut of DeepSeek, a Chinese artificial intelligence (AI) startup, which triggered a major selloff in tech stocks. Investors grew concerned that the AI bubble might have finally burst. DeepSeek’s success appears tied to its claim of developing an AI model with performance comparable to U.S. tech giants like Meta (META) and OpenAI, but at a significantly lower cost.
This cost efficiency has raised concerns among investors, who are now questioning the high premiums paid for shares of U.S. tech companies. JPMorgan noted that “DeepSeek’s highly efficient and lower resource-intensive AI model” has ignited discussions about the potential overvaluation of the AI investment cycle.
