Chinese AI app DeepSeek rattles markets and wipes billions off tech stocks
A low-cost artificial intelligence model from a little-known Chinese start-up shook assumptions about the economics of AI, triggering a sharp sell-off.
Global technology stocks tumbled on Monday after a little-known Chinese start-up called DeepSeek released an artificial intelligence model that appeared to rival the best American systems at a fraction of the cost, upending assumptions that had underpinned a soaring market.
DeepSeek said its model had been trained for a relatively modest sum and could run efficiently on less powerful chips, challenging the prevailing belief that cutting-edge AI required enormous spending on specialised hardware. The claim sent a jolt through markets that had bet heavily on ever-rising demand for advanced chips and data centres.
The chipmaker Nvidia, which had become one of the world's most valuable companies on the back of the AI boom, saw hundreds of billions of dollars wiped off its market value in a single day, one of the largest such losses in history. Other technology and energy stocks tied to the AI build-out also fell sharply.
The app shot to the top of download charts, and its arrival intensified debate about the state of competition between the United States and China in a technology seen as strategically vital. Some analysts questioned DeepSeek's cost claims, while others argued that cheaper, more efficient AI could ultimately expand the market.
The episode was a reminder of how quickly the fast-moving field could surprise investors, and of how much of the market's value had come to rest on expectations about a single, still-young technology.