MIAMI, Jan 28 (Reuters) - Hedge fund manager Bridgewater

Associates said Chinese startup DeepSeek's launch of its latest

artificial intelligence (AI) models could lead to a short-term

correction in many tech companies' share prices but is positive

for the industry.

The comments come amid a tech stocks sell-off prompted by

the release of a free AI assistant launched by DeepSeek last

week that the startup said uses less data at a fraction of the

cost of services currently available.

DeepSeek's AI Assistant has overtaken rival ChatGPT to

become the top-rated free application available on Apple's App

Store in the United States, raising doubts about the reasoning

behind some U.S. tech companies' decision to pledge billions of

dollars in AI investment.

"DeepSeek's progress is big news, but not bad news for most

of the AI ecosystem," Bridgewater said in a note on Monday

authored by Co-Chief Investment Officer Greg Jensen and Jas

Sekhon, chief scientist of AIA Labs, a division within the hedge

fund focused on developing and utilizing AI and machine learning

technologies to generate investment strategies and insights.

DeepSeek threatens share prices for many tech stocks in the

short term, Bridgewater said.

"This may be especially true for Nvidia ( NVDA ), because DeepSeek's

success may encourage companies to invest more in achieving

efficiency gains by optimizing how AI software interacts with

the hardware," said the note.

Shares in Nvidia ( NVDA ), a leader in the AI chip market,

fell 17% on Monday, wiping $593 billion from its market value -

a record one-day loss for any company - and dragged U.S. stocks

lower. That drop was partly corrected on Tuesday, with Nvidia ( NVDA )

shares up around 5% in premarket trading.

Still, DeepSeek's progress is overall positive for the

development of AI technologies, said the hedge fund, and could

accelerate the emergence of non-tech leading companies adopting

it more broadly.

"That is the moment when AI adoption becomes as existential

to everyone as it is today for Google and Microsoft ( MSFT ). It is then

that we expect the true bubble to manifest," it said.