The global artificial intelligence race witnessed a seismic shift as the launch of DeepSeek, a Chinese-developed chatbot, sent shockwaves through US tech markets. Dubbed a “Sputnik moment” by investors, the emergence of DeepSeek wiped over $1 trillion off the Nasdaq Composite Index, sparking a re-evaluation of AI investments.
DeepSeek, positioned as a rival to OpenAI’s ChatGPT, has impressed analysts with its ability to deliver comparable performance while using fewer resources. On Monday, the tech-heavy Nasdaq Composite fell by 3.1%, with Nvidia suffering the largest single-day loss in US stock market history. The chip giant’s shares dropped 17%, erasing $600 billion in market value and pushing Apple to reclaim its title as the most valuable US company.
What Sets DeepSeek Apart?
DeepSeek claims its AI model, R1, outperforms leading western models across key benchmarks, achieving remarkable results with reduced resources. Developed using Nvidia’s H800 chips—restricted to the Chinese market due to US export sanctions—DeepSeek has raised questions about the effectiveness of Washington’s tech restrictions.
The company’s founder, Liang Wenfeng, developed DeepSeek with a mission to make AI accessible and affordable. Remarkably, the R1 model was created at a reported cost of just $5.6 million, significantly lower than the $100 million to $1 billion estimates for similar western models.
A Blow to US Tech Dominance
The fallout from DeepSeek’s launch extended beyond the US, with European and Asian markets also experiencing losses. Major companies like ASML, Siemens Energy, and Schneider Electric faced declines, highlighting the global impact of this development.
President Donald Trump called the emergence of DeepSeek a “wake-up call” for the US tech industry, emphasizing the need for strategic competition in AI. Investors and analysts now face tough questions about whether the extensive investments in AI infrastructure by US firms will yield the expected returns.
A Shift Toward Open-Source AI Development
DeepSeek’s decision to offer its assistant and underlying code as open-source has been hailed by experts as a step toward democratizing AI access. Dr. Andrew Duncan of the Alan Turing Institute noted that DeepSeek’s approach demonstrates that groundbreaking innovations can be achieved without the massive resources of giants like OpenAI.
As the AI race heats up, DeepSeek’s launch has not only disrupted financial markets but also sparked debates about innovation, affordability, and the future of artificial intelligence.
