Developed by Chinese engineers, DeepSeek claims to deliver performance comparable to leading AI models while only spending $5.6 million on semiconductor chips, a fraction of the costs incurred by major players like OpenAI and Meta Platforms.

This breakthrough challenges the prevailing belief that substantial capital is necessary for AI development, indicating that innovative solutions can emerge from limited resources.

James Wo, founder of Digital Finance Group, cautioned that while DeepSeek's success could extend the AI rally, its long-term sustainability will hinge on continued innovation.

Morgan Stanley cut Broadcom's target price due to concerns that deflationary AI innovations could negatively impact chip companies.

DeepSeek utilized Nvidia's reduced-capacity H800 GPUs for training, contrasting with the powerful H100 GPUs employed by many US companies, raising questions about the future of chip suppliers.

On January 27, 2025, Wall Street experienced a notable shift as the AI assistant app DeepSeek-V3 gained significant attention for its advanced capabilities and low development costs.

Mel Morris, CEO of Corpora.ai, highlighted that DeepSeek's entry into the market could disrupt the AI landscape, making advanced technology more accessible to smaller companies and startups.

The revelation that AI performance can be achieved with less expensive technology led to sharp declines in stock prices for companies like Nvidia, Broadcom, and Marvel Technology, with Nvidia's shares dropping 17% on the same day.

Key stocks at risk due to DeepSeek's emergence include Nvidia, Oracle, and Broadcom, as companies may pivot to more cost-effective AI solutions.

Oracle faced a staggering $70 billion drop in stock value following the DeepSeek news, resulting in a $27.6 billion decrease in Larry Ellison's net worth, although the stock regained some losses by the week's end.

By January 30, the market recovery was modest, with Nvidia down 15% over five days, while Broadcom and Marvel Technology also experienced significant share price declines.