Tech Stocks Tumble as China's DeepSeek Challenges U.S. AI Dominance
A new Chinese AI model from DeepSeek triggers a massive Wall Street selloff, wiping nearly $600 billion from Nvidia's market value. The surprisingly cheap and efficient open-source model raises serious doubts about the massive AI spending by U.S. tech giants.
U.S. tech stocks experience a massive selloff as a Chinese artificial intelligence startup named DeepSeek raises serious concerns about American dominance in the global AI race. The Nasdaq Composite plunges more than 3%, while the S&P 500 drops almost 1.5% amid fears that China is rapidly catching up to U.S. tech giants.
DeepSeek releases an open-source AI model that reportedly takes only two months and less than $6 million to create, a stark contrast to the hundreds of billions of dollars invested by American companies like OpenAI, Microsoft, and Meta. The DeepSeek app currently sits at the top of the Apple App Store, pushing OpenAI's ChatGPT into second place and highlighting the efficiency of China's AI development.
Chipmaker Nvidia suffers the biggest single-day market value loss in U.S. stock market history, with shares plummeting 18% and wiping out nearly $600 billion in market capitalization. Other semiconductor companies like Micron Technology and Arm Holdings also see significant losses, while mega-cap tech firms including Microsoft, Alphabet, and Meta experience notable stock drops.