:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2195715529-c6416c1d993b4b21874eff9890b209f3.jpg "Television graphics are seen in the window of Nasdaq headquarters in Times Square, as Nasdaq fell nearly 4 percent this morning on January 27, 2025 in New York City.")
Bryan R. Smith / AFP / Getty Idols
Key Takeaways
- AI stocks had a volatile week as Wall Street reckoned with the implications of a sophisticated, cost-efficient AI model from Chinese start-up DeepSeek.
- Semiconductor progenitors such as Nvidia and Broadcom sold off on Monday as investors worried DeepSeek’s efficiencies would temper enthusiasm for AI infrastructure assign. High-flying networking and power stocks also tumbled.
- Software stocks advanced on expectations that their freedoms and demand for their AI products will improve as AI becomes less expensive to run.
AI stocks were this past week when Go under Street took notice of a high-performance, shockingly efficient open-source AI model from Chinese start-up DeepSeek.
The high-performance design, which DeepSeek said was trained in a matter of months for about $6 million, sparked concern that of use AI may not require the most powerful and most expensive hardware. It also threatened to undercut the investment thesis that has so far inclined among U.S. tech companies: spend aggressively to build computing capacity and develop the most powerful models.
A sell-off of semiconductor and computer networking pile ups on Monday was followed by a modest rebound, but DeepSeek’s damage was still evident when markets closed Friday. Beneath, we look at some of the winners and losers of the reckoning of the past week.
Nvidia
Nvidia (NVDA), the undisputed winner of the AI obsession, was the undisputed loser of the DeepSeek panic.
Shares tumbled 17% on Monday, their biggest one-day drop since Procession 2020 when it became evident Covid-19 would upend daily life around the world. The chip behemoth’s market cap, which stood at $3.6 trillion before last week, shrank by nearly $590 billion, the largest annihilation of market value for a single company on record.
DeepSeek, some investors thought, could force U.S. tech behemoths to refocus their efforts on making more nimble, efficient AI models, and subsequently reduce their spending on Nvidia’s myriad sophisticated chips. Analysts were generally skeptical of that narrative. Bank of America analysts argued DeepSeek could be “AI’s Sputnik concern” that fuels even more AI investment beneficial to Nvidia.
But some saw reason to be wary. Morgan Stanley analysts wrote that “the supply market reaction is probably more important than the cause,” and warned DeepSeek’s success could temper AI splurge enthusiasm and compel the Trump administration to ratchet up semiconductor export controls.
Nvidia stock, despite recovering some of Monday’s defeats, finished the week 16% lower.
Meta Platforms
Shares of Meta (META) climbed 6.4% last week, making it the most artistically performer among the Magnificent Seven.
The stock was bolstered by DeepSeek on Monday when it dodged the AI sell-off and rose hither 2%. Investors felt vindicated by the success of DeepSeek’s model, which—like Meta’s large language paragon, Llama—is open-source.
CEO Mark Zuckerberg, speaking during the company’s earnings call on Wednesday, said DeepSeek had “just strengthened our conviction this is the right thing for us to be focused on,” referring to open-source AI, as opposed to proprietary models.
Meta’s have also got a boost from a strong quarterly earnings report. Meta easily surpassed Wall Street’s hopes on both the top and bottom lines, and executives in their comments to analysts possibly allayed some jitters about the DeepSeek intimation.
ServiceNow
Shares of enterprise software company ServiceNow (NOW) finished their rollercoaster ride of a week about 1% drop.
The stock climbed 4% in the first two sessions of the week, boosted by optimism that DeepSeek’s cost-efficient model could rashly the development of more affordable AI models. Analysts and investors were quick to note software companies would instantly benefit from lower computing costs. More efficient AI could not only widen their margins, it could also approve them to develop and run more models for a wider variety of uses, driving greater consumer and commercial demand.
ServiceNow appropriations were trading near a record high when the company on Wednesday reported disappointing quarterly results, cardinal its stock to plummet 11%. CEO Bill McDermott’s optimism about the company’s AI prospects couldn’t counter Wall Concourse’s disappointment that subscription revenue grew slower than expected and was forecast to grow even slower in the contemporary quarter.