DeepSeek AI model sends shockwaves through US tech firms as stocks plunge
DeepSeek AI model sends shockwaves through US tech firms as stocks plunge
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The emergence of Chinese artificial intelligence firm DeepSeek rocked US tech giants’ stocks on Monday night amid concerns that the new low-cost AI model would upend their dominance. Tech shares plunged and chip maker Nvidia suffered falls of nearly 17% on Monday, as President Donald Trump warned DeepSeek’s emergence was a “wake up call” for existing AI giants.
Nvidia’s drop in share price marked the biggest ever one-day loss in market value on Wall Street, of about 589 billion dollars. Just a week after its launch, DeepSeek has quickly become the most downloaded free app in the US. It claims that its large language AI model was made at a fraction of the cost of its rivals, including OpenAI, which uses more expensive Nvidia chips to train its systems on vast swathes of data.
Since Nvidia uses chips produced by TSMC in Taiwan, it could be hit by the tariffs. The announcement has raised significant doubts over the future of US firms’ dominance in AI, prompting the sharp falls for Nvidia, as well as tech giants including Microsoft, Meta and Google parent Alphabet, which are all pouring billions into AI.
The S&P 500 dropped 1.5%, dragged down in large part by the fall from Nvidia. DeepSeek’s claims also affected tech stocks elsewhere, with Dutch chip making company ASML falling 7% and Japan’s Softbank dropping 8.3%. Analysts said the announcement from DeepSeek is especially significant because it indicates that Chinese firms have innovated faster despite the US putting controls on exports of Nvidia’s most powerful chips to the country.
