Artificial intelligence stocks have produced solid gains for several years, but they recently hit a big bump in the road. DeepSeek, China’s AI app, was only produced with $6 million. This startling claim puts the billions of dollars spent on AI into question.
Many AI stocks depend on big tech companies having big budgets for AI initiatives, but if these companies can save 50%-90% on costs, it doesn’t spell good news for the companies that have profited the most from artificial intelligence.
Stocks like Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) are down by more than 10% upon the news. Is this the start of a big crash, or is it better to buy and hold for the long run? Here’s what investors should know about the sharp drop in AI stocks.
This post originally appeared at 24/7 Wall St.