By Carolina Mandl
MIAMI (Reuters) – Hedge fund manager Bridgewater Associates said Chinese startup DeepSeek’s launch of its latest artificial intelligence (AI) models may lead to a short-term correction in lots of tech corporations’ share prices but is positive for the industry.
The comments come amid a tech stocks sell-off prompted by the discharge of a free AI assistant launched by DeepSeek last week that the startup said uses less data at a fraction of the associated fee of services currently available.
DeepSeek’s AI Assistant has overtaken rival ChatGPT to change into the top-rated free application available on Apple’s App Store in the USA, raising doubts in regards to the reasoning behind some U.S. tech corporations’ decision to pledge billions of dollars in AI investment.
“DeepSeek’s progress is big news, but not bad news for a lot of the AI ecosystem,” Bridgewater said in a note on Monday authored by Co-Chief Investment Officer Greg Jensen and Jas Sekhon, chief scientist of AIA Labs, a division inside the hedge fund focused on developing and utilizing AI and machine learning technologies to generate investment strategies and insights.
DeepSeek threatens share prices for a lot of tech stocks within the short term, Bridgewater said.
“This may occasionally be very true for Nvidia, because DeepSeek’s success may encourage corporations to speculate more in achieving efficiency gains by optimizing how AI software interacts with the hardware,” said the note.
Shares in Nvidia, a frontrunner within the AI chip market, fell 17% on Monday, wiping $593 billion from its market value – a record one-day loss for any company – and dragged U.S. stocks lower. That drop was partly corrected on Tuesday, with Nvidia shares up around 5% in premarket trading.
Still, DeepSeek’s progress is overall positive for the event of AI technologies, said the hedge fund, and will speed up the emergence of non-tech leading corporations adopting it more broadly.
“That’s the moment when AI adoption becomes as existential to everyone because it is today for Google and Microsoft. It’s then that we expect the true bubble to manifest,” it said.
(Reporting by Carolina Mandl, writing by Davide Barbuscia,; editing by Louise Heavens)