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Investing.com -- Shares of AI infrastructure companies plummeted on Monday as investors responded to news that China's DeepSeek has developed a highly efficient open-source language model, potentially impacting future capital expenditures in the AI industry.
The innovative model, which rivals the performance of GPT-4 with significantly less computing power, has introduced uncertainty regarding the growth of demand for computing power.
The architecture of DeepSeek's model, which combines Mixture of Experts (MoE) and Meta-Learning Algorithms (MLA) with high-quality parameter processing, has set a new precedent for model efficiency. This development could prompt the AI sector to prioritize return on investment (ROI) more heavily, leading to a reassessment of necessary computing power.
As a result, projections for AI-related capital expenditures in 2026 are now being questioned, with potential declines or stagnation on the horizon.
GE Vernova, Constellation Energy (NASDAQ:CEG) Corp., Vistra Corp., and Ciena (NYSE:CIEN) Corp. all experiencing significant drops in their stock prices, with Vertiv shares down as much as 14%.
Jefferies analyst Edison Lee commented on the situation, stating, "The market naturally will worry about demand growth in computing power."
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