DeepSeek has launched an AI model that was reportedly developed with significantly less computational power than traditional methods. Shares of Nvidia are under pressure amid concerns that DeepSeek's methods may undermine demand for its high-performance GPUs.

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 stocks such as Nvidia and Broadcom sold off on Monday as investors worried DeepSeek's efficiencies would temper enthusiasm for AI infrastructure spending.

DeepSeek stunned the tech world with the release of its R1 "reasoning" model, matching or exceeding OpenAI's reasoning model for a fraction of the cost.

The news is the latest sign of skyrocketing valuations for privately held AI start-ups, which show growing investor enthusiasm for AI and confidence that companies like Anthropic will justify that valuation over the long term, eventually generating billions in profits.

Chuck Zodda, managing partner and Chief Investment Officer from the Armstrong Advisory Group discusses the dip of tech stocks, especially Nvidia after the announcement of Chinese AI start-up DeepSeek.

Some of Nvidia's rivals in the AI space, including Arm and Broadcom, also saw their share prices slump on Monday. Stock prices regularly move, sometimes dramatically so, in response to relevant market announcements.

Nvidia stock surged as the AI chipmaker began to recover from a massive decline the prior day that shaved nearly $600 billion off its market cap.

the chip maker saw its market value drop by $593 billion, the biggest one-day drop for any listed company on record.