Global shares in $1 trillion rout after China's DeepSeek sends AI and tech stocks plunging
Global shares in $1 trillion rout after China's DeepSeek sends AI and tech stocks plunging
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Fear gripped Wall Street today on fears that the artificial-intelligence tech giants that have propelled the US stock markets to dizzying heights are under threat from a previously little known Chinese competitor called DeepSeek. In early trading the S&P 500 was down 1.6% with big tech stocks taking the worst of a battering which analysts feared could see $1 trillion £800 billion) knocked off share values. At one stage AI giant Nvidia was 11.2% lower - its largest ever daily decline - helping to drag the tech heavy Nasdaq index down 3.6%, its biggest fall since September. The Dow Jones Industrial Average, which has more of an emphasis on “old economy” stocks, was holding up better with a dip of just 123 points, or 0.3%.
The shock came after DeepSeek said it had developed a large language model known as R1 that can compete with U.S. giants but at a fraction of the cost. It is said to have spent less than $6 million developing the model. DeepSeek’s app hit the top of Apple’s App Store this morning. Analysts said such a feat would be particularly impressive given how the U.S. government has restricted Chinese access to top AI chips.
Skepticism, though, remains about how much DeepSeek’s announcement will ultimately shake the AI supply chain, from the chip makers making semiconductors to the utilities hoping to electrify vast data centers running those chips. “It remains to be seen if DeepSeek found a way to work around these chip restrictions rules and what chips they ultimately used as there will be many skeptics around this issue given the information is coming from China,” according to Dan Ives, an analyst with Wedbush Securities.
