AI Revolution Shakes Tech Stocks as China's DeepSeek Challenges U.S. Dominance

Nvidia saw a 17% drop in market value due to competition from a low-cost AI model by China's DeepSeek, causing tech stocks globally to tumble. The recovery observed on Tuesday was fragile, hinting at long-term uncertainties for the AI sector. Investors are now strategizing future AI investments cautiously.

On Tuesday, technology shares regained some lost ground with Nvidia rallying over 6% following a Monday selloff. The decline was triggered by China's DeepSeek introducing a cheaper AI model, challenging U.S. companies' dominance and causing a $1 trillion market shedding.

Industry feedback suggests a reassessment of AI investments, sparked by growing competition and skepticism regarding DeepSeek's innovations. Chip analyst Cody Acree notes that even with cost-effective models, demand for advanced chips remains strong.

Despite initial doubts, DeepSeek has shifted industry perceptions on China's capabilities, pushing established tech giants to anticipate significant AI advancements and competitive pressures ahead.

(With inputs from agencies.)