What is DeepSeek R1, and Why Did It Trigger a Global Market Sell-Off?
MC Desk | January 27, 2025
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DeepSeek R1 is a state-of-the-art reasoning model developed by the Chinese AI startup DeepSeek.
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DeepSeek R1 aims to augment reasoning and analytical capabilities, positioning it as a formidable contender to other prominent AI models such as OpenAI’s o1 and ChatGPT.
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New tech has stoked fears about the competitive edge of U.S.-based tech giants, particularly those heavily invested in artificial intelligence, such as Nvidia and Microsoft.
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Nvidia, a leader in AI and chip manufacturing, saw its stock fall nearly 11% in premarket trading. Other tech players, such as AMD and Alphabet, also experienced declines, reflecting broader market unease.
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China’s foray with Deepseek has fuelled broader concerns about geopolitical tensions and their impact on the technology sector.
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Benchmark BSE Sensex tanked 824 points to settle at more than seven-month low. Sensex plunged 1.08% at 75,366.17, while Nifty dropped 1.14% to close at 22,829.15, tanking below the 23,000-level for the first time since June 6, 2024.
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While there is no direct impact of DeepSeek on Indian companies, the broader policy implications will keep markets on tenterhooks for a while, including Union Budget on February 1.
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