After the indices, and tech stocks in particular, took a heavy hit following the launch of the Chinese AI DeepSeek, the recovery that began yesterday is continuing today.
After the DeepSeek Euphoria comes Analysis and Doubt
The euphoria about DeepSeek and investors' fears arose primarily from the stated costs and the alleged use of fewer and cheaper chips for the AI language model. In particular, the statement that less powerful chips from Nvidia were used caused the share price of the leading chip manufacturer for the AI sector to plummet by almost 17%.
However, the initial shock on the markets is naturally followed by a deeper analysis of what has happened. The first thing that comes to mind is that the export of Nvidia chips to China is severely restricted by the authorities. This leads to the assumption that the actual type and number of chips used can at least be called into question.
Recognition but no Enthusiasm in the AI Industry
The first assessments of DeepSeek from the AI industry have also been received. The industry pays genuine tribute to the progress made in the development of DeepSeek. Ultimately, however, the consensus is that this is a step in AI development, as there have been many since the emergence of AI. This one just came from China, which should not be seen as unusual, as there is of course a great potential for top talent in development there too.
Nvidia and Indices on the road to recovery
Once the initial shock had passed, the recovery of the most important players in the AI sector began yesterday. Nvidia's share price rose by around 8.5% yesterday, making up for half of the drastic slump of almost 17%. The recovery in the indices is clear, with the S&P 500 and Nasdaq currently back at the level of Monday's opening price. Whether this recovery is sustainable could become clear this evening when the US Federal Reserve publishes its first interest rate decision and statements on the future course of monetary policy are expected at the subsequent press conference.
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