Micron Technology's stock experienced a significant plunge of 10.25% on Monday morning. The primary reason behind this steep decline was the emergence of DeepSeek, a Chinese artificial intelligence startup that reportedly developed powerful AI models at a fraction of the cost compared to its Western counterparts.
DeepSeek's claims about its ability to train AI models using less-powerful and cheaper chips have raised concerns about the future demand for expensive AI chips and high-bandwidth memory (HBM) chips produced by companies like Micron. Analysts have warned that DeepSeek's progress calls into question the computing power needed to develop AI systems, a crucial driver for AI stocks and related memory chip demand.
The news sent shockwaves through the semiconductor and technology sectors, with Micron and other chip stocks tumbling in premarket trading. Investors are now reassessing the potential impact of DeepSeek's advances on the earnings and valuations of companies that have invested heavily in AI infrastructure and hardware.
