Marvell Technology (MRVL) stock experienced a significant pre-market plunge of 9.19% on Monday, January 27th, 2025, as investors grappled with the potential impact of a powerful AI model developed by Chinese startup DeepSeek at a relatively low cost.
DeepSeek claims to have built a potent AI model using less expensive chips, costing only $6 million to develop. This purported breakthrough has raised concerns that it could undermine the demand for high-end and costly AI chips produced by semiconductor companies like Marvell, which are crucial for advanced AI applications.
The news rattled the broader technology sector, with chip stocks, quantum computing companies, nuclear energy firms, and crypto-related shares also experiencing declines in overnight trading. Investors appear wary that DeepSeek's purported achievement could disrupt the demand dynamics for expensive AI hardware, potentially impacting the revenue streams and growth prospects of companies in these sectors.
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