📉US100 loses 2.5%

🚩Chinese DeepSeek AI debut pressures US technology sector. Wall Street at risk❓

The new week on financial markets begins with sharp declines in indices amid potential shifts in the balance of power within the rapidly developing artificial intelligence (AI) sector.

• Today's sell-off on Wall Street can be attributed to the debut of the AI model DeepSeek V3. The Chinese model has "shaken" the Nasdaq 100 index, driving futures down by over 2.5% at the start of the week.
• Today's declines are significant. Nvidia's stock is down 6.5% in pre-market trading, Microsoft is losing 3.3%, Bitcoin has dropped 5.4%, and the VIX fear index has surged by 9% during the same period.

The DeepSeek company claims to have spent approximately $6 million and only a few months to train the new AI model. This is just a fraction of the money and time that U.S. competitors had to invest to train the AI models developed by leading tech conglomerates. This has led some investors to question the justification for the enormous investments in AI development by U.S. firms. Despite previous beliefs that China was lagging in this field, the competition appears to have developed its technology far more cost-effectively and seemingly just as efficiently.

• Reports suggest that the company used older-generation Nvidia H800 chips. Some sources indicate that DeepSeek, backed by the Chinese fund High Flyer Capital, may have used between 10,000 and 50,000 older Nvidia AI chips, despite U.S. export restrictions. Even in this scenario, the upper limit of these chips corresponds to only about 10% of those used by major American AI models like ChatGPT.
• The DeepSeek V3 model debuted on January 10 as an open-source platform. It is modifiable, and its inference process is transparent, unlike products from OpenAI and many other "Western" AI models.
• In contrast to OpenAI and other AI companies in the West, DeepSeek is expected to achieve profitability much faster and avoid reliance on "external funding injections."
• Recent market reports indicate that Big Tech is not ignoring DeepSeek. Its debut has drawn comments from prominent figures, including Microsoft CEO Satya Nadella and Chamath Palihapitiya, a former Facebook executive. Palihapitiya warned that DeepSeek's successful debut and quality might raise doubts about the need for continued "massive" investments in artificial intelligence.
• The latest data shows that DeepSeek has surpassed ChatGPT in downloads on the Apple Store. The model's debut may serve as a wake-up call for investors regarding the high valuations of American stocks. Wall Street may begin questioning whether the multi-billion-dollar investments in AI infrastructure are truly necessary.

US100 (H1 interval)

US100 is experiencing sharp losses this morning, testing the support zone around 21,400 points, which recently served as the upper boundary of a descending channel on the H1 timeframe. Source: xStation5