A Chinese company’s claim of a $5.6mn artificial intelligence breakthrough wiped almost $600bn from Nvidia’s market value on Monday, shattering Wall Street’s confidence that tech companies’ AI spending spree will continue and dealing an apparent blow to US tech leadership. Yet many in Silicon Valley believe the broad sell-off is an overreaction to DeepSeek’s latest model, which they argue could spur wider adoption and utility of AI by radically lowering the technology’s cost, sustaining demand for Nvidia’s chips. Pat Gelsinger, recently forced out as chief executive of Intel, was among those buying his former rival Nvidia’s stock on Monday. “The market reaction is wrong: lowering the cost of AI will expand the market,” he said in a LinkedIn post. “DeepSeek is an incredible piece of engineering that will usher in greater adoption of AI.” Nvidia became the world’s most valuable company last year as investors bet on Big Tech companies’ insatiable appetite for its powerful AI processors. The chipmaker’s chief executive Jensen Huang has predicted $1tn worth of AI data centres will be built in the next few years. Underpinning that confidence was the concept of an AI “scaling law”, popularised by senior leaders at AI start-ups such as OpenAI and Anthropic, that suggested AI models got smarter as they were fed more data and computing resources.

Full report : DeepSeek spent “well over $500M on GPUs”; TechInsights says DeepSeek isn’t “a big hit to Nvidia” but “a bigger problem for companies like OpenAI.”