A new AI chatbot from China, called DeepSeek, has shaken up the global tech market, causing US tech stocks to lose over $1 trillion.
DeepSeek is seen as a major competitor to OpenAI’s ChatGPT, but what really shocked investors was its claim that it developed its latest AI model, the R1, at a much lower cost. Unlike US companies that rely on expensive Nvidia chips, DeepSeek says it found a cheaper way to train its AI.
This news hit the stock market hard. The Nasdaq Composite dropped 3.1%, wiping out more than $1 trillion in value. Nvidia, a leader in AI chip production, saw its stock tumble by 17%, losing nearly $600 billion in value. Apple regained its position as the most valuable US company, while Alphabet (Google’s parent company) and Microsoft lost $100 billion and $7 billion, respectively.
DeepSeek quickly became the top AI app in the US and UK Apple app stores over the weekend, drawing even more attention.
Former US President Donald Trump called the development a “wake-up call” for the US, stressing the need to stay ahead in AI technology. OpenAI’s CEO Sam Altman welcomed the competition, praising DeepSeek’s performance and lower costs.
However, DeepSeek’s launch wasn’t entirely smooth. On Monday, a cyberattack temporarily disrupted new user registrations. The company confirmed it was a “large-scale malicious attack” but assured that existing users weren’t affected.
DeepSeek’s claim of building AI with fewer chips has raised questions about whether US tech companies need to rethink their massive investments in AI development.