DeepSeek challenges Nvidia and causes a historic drop in the tech market.

In an unexpected turn of events in the realm of artificial intelligence, DeepSeek, a Chinese-origin AI assistant, has challenged the dominance of Nvidia, a US giant in the sector. This Monday, the free application became the most downloaded in the iPhone store, generating unprecedented excitement in the markets and the tech industry. With meteoric growth, DeepSeek has transformed from an investment fund in 2015 into a startup in 2023, capable of competing technologically with Chat GPT, the popular platform from OpenAI.

The speed of this rise has raised concerns about the future of AI. DeepSeek, which can communicate in multiple languages and offers functionalities similar to its Western rivals, such as writing song lyrics or suggesting recipes, poses a fundamental question: is it possible that the next generation of AI will not rely on expensive data centers or advanced chips? This shift in the technological paradigm is what has led many to question the sustainability of the companies that have dominated the market until now.

Wall Street's response was swift. In a single day, Nvidia suffered a loss of nearly $600 billion in its market capitalization, marking one of the most significant declines in market history. This drastic decrease reflects the panic generated by the emergence of a new competitor that may threaten the firm's dominance in the artificial intelligence market.

The impact of the news was also felt in the Nasdaq index, which fell by 3.07%, while the S&P 500 lost 1.46%. Although the Dow Jones managed to recover with a 0.65% increase, the overall trend was one of distrust towards tech stocks, with Nvidia at the forefront. This situation has sparked a debate about whether the market reaction was exaggerated or, conversely, a sign of profound changes in the industry.

Pablo Leno, general manager of Renta 4 SAB, believes that the market decline reflects more of a scare than a rational assessment. "The markets have not known how to digest the news," he points out, recalling that significant drops in stocks were already anticipated before the opening. However, as the day progressed, the indices began to recover, suggesting that the initial panic may have been disproportionate.

The drop in Nvidia's value raises the question of what it means for the company's future and its role in the industry. The firm had been in a privileged position, with robust growth expectations in the field of artificial intelligence. The emergence of DeepSeek, a competitor that seems to have burst onto the scene from nowhere, has led investors to reconsider their positions, resulting in massive sell-offs and a tendency to hold cash instead of investing in high-risk stocks.

The big question now is whether Nvidia and the tech sector in general will be able to recover from this shock. Leno suggests that as the markets adjust their expectations and realize that prices have fallen to unjustified levels, we are likely to see a correction in the coming days. The key will be how the situation evolves with DeepSeek and whether its innovations can sustain themselves in the market long-term.

For investors considering whether to continue betting on tech companies associated with AI, the current situation is complex. Nvidia's high valuation ratios had already raised doubts before the news of DeepSeek, and now, more than ever, caution is required. Leno recommends waiting and observing how events unfold before making hasty decisions that could be detrimental. "I appeal for patience; it is crucial not to be carried away by panic and to wait and see what news emerges regarding DeepSeek," he concludes.

In a world where innovation is advancing rapidly, the story of DeepSeek and its impact on the market reminds us that the future of technology is uncertain, filled with opportunities and risks that must be managed prudently. The battle for supremacy in artificial intelligence is far from over, and DeepSeek's next move could change the game forever.