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U.S. chip stocks, once the darlings of AI investment, have faced significant declines this year, prompting investors to pivot towards software companies. The emergence of lower-cost AI models from China's DeepSeek and tariff-driven volatility have contributed to this shift. Analysts suggest that the focus is now on software as the next big opportunity in the AI sector.
Software companies like Atlassian, CrowdStrike, and Palantir have seen stock increases between 7% and 19%, contrasting sharply with the downturn in semiconductor stocks. The iShares Expanded Tech-Software Sector ETF has attracted substantial inflows, indicating a growing investor preference for software over chips. This transition reflects a broader trend in AI investing, where the practical applications of AI technology are increasingly software-centric.
• Investors are shifting focus from chip stocks to software companies.
• Palantir's AI software sales have seen significant growth amid market shifts.
Artificial Intelligence refers to the simulation of human intelligence in machines, which is central to the software companies' growth.
AI models are algorithms that enable machines to perform tasks, with lower-cost models from DeepSeek impacting market dynamics.
A chatbot is an AI application designed to simulate conversation, exemplified by DeepSeek's lower-priced offering affecting competition.
Nvidia is a leading semiconductor company known for its GPUs, which have been pivotal in AI development but are now facing market challenges.
Palantir specializes in AI software solutions for businesses, experiencing a stock rally as demand for its products increases.
Isomorphic Labs, the AI drug discovery platform that was spun out of Google's DeepMind in 2021, has raised external capital for the first time. The $600
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Sam Altman today revealed that OpenAI will release an open weight artificial intelligence model in the coming months. "We are excited to release a powerful new open-weight language model with reasoning in the coming months," Altman wrote on X.
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