The trading on Monday ended with the stocks of many US tech companies lowering in value after the emergence of a new, low-cost Chinese AI chatbot that has disrupted global markets.
Here is a quick recap of key developments:
Chinese AI chatbot DeepSeek has shot up to becoming the most downloaded free app in the US after its launch last week, overtaking rivals like ChatGPT by American firm OpenAI
DeepSeek’s popularity has rattled markets, causing US tech giant Nvidia, which manufactures vital microchips needed to use and develop AI systems, to drop $500 billion (£400 billion) in stock price
Other US tech giants, like Microsoft, Tesla, Google-owner Alphabet – and also saw their shares drop today
The Chinese-made app has been hailed for its ability to process information in a way that is more cost-efficient, raising questions by investors about US dominance in AI
The app, however, has hit some issues. It announced today it was temporarily halting new user registrations after it was hit with a “large-scale malicious attack”
And our North America technology correspondent Lily Jamali has tested it, finding that it works in many ways similarly to other AI chatbots – but it also seems to censor answers questions relating to the 1989 massacre in Tiananmen Square in Beijing
DeepSeek says its latest model beats rivals on image generation
DeepSeek claims in a technical report that its latest model, the Janus-Pro-7B, performs better on image generation than other tools by rivals OpenAI and StabilityAI.
The Chinese startup released the Janus upgrade as US tech stocks were reeling from the launch of its new AI assistant based on the DeepSeek-V3 model.
DeepSeek’s AI-powered chatbot has become the most downloaded free app on Apple’s store, following its January release in the US.
The company’s advances in AI training and relatively small budget have raised questions about the multi-billion dollar investments being made into AI infrastructure.
How the emergence of a new low-cost Chinese AI chatbot startled stock markets in Europe and the US:
The popularity of new low-cost Chinese AI app has sparked market turmoil causing US tech giant Nvidia to drop $500 billion in stock price
The DeepSeek app has overtaken rivals including ChatGPT to become the most downloaded free app in the United States
Questions now being asked by investors about America’s dominance in artificial intelligence
Researchers claim that DeepSeek was developed for around $6m – significantly less than the billions spent by rivals – but this has been disputed by others in AI
AI chipmaker Nvidia had plunged 16% midway through trading, while rival Broadcom had slumped 17.8%
US tech giants including Microsoft and Meta all saw their share prices drop today
DeepSeek breakthrough raises questions about US chip export restrictions
DeepSeek’s ability to create highly disruptive AI models is casting doubt over the effectiveness of US restrictions on the export of advanced computer chips to China.
The US has been tightening those trade curbs since 2022 in the hope that they would help keep it ahead in the race to develop powerful AI systems.
“I’d say they are starting to fail to give the US an edge, because now it has become a totally different game to play, and DeepSeek is the game changer,” said Wei Sun, an AI expert with technology research firm, Counterpoint Research.
Others argued that the trade curbs ended up giving Chinese AI developers a boost.
“The export restrictions have inadvertently pushed Chinese tech companies like DeepSeek to become more creative and efficient,” said Marina Zhang, an associate professor at the University of Technology Sydney, who focuses on China’s high-tech industries.
“DeepSeek’s success demonstrates that constraints can drive creativity, challenging the assumption that technological leadership is solely dependent on hardware superiority.”
DeepSeek is “impressive” – ChatGPT founder Sam Altman
In a post on X, ChatGPT’s Sam Altman calls DeepSeek’s latest offering “an impressive model, particularly around what they’re able to deliver for the price”.
But he emphasises that OpenAI believes greater computing power is key to the success of its own model.
He says: “we will obviously deliver much better models and also it’s legit invigorating to have a new competitor! we will pull up some releases.”
Altman made his fortune by investing in huge tech start-ups like Reddit and Airbnb, before turning his attention to artificial intelligence.
He created and still helms OpenAI’s ChatGPT – a large language model that passed one million users in less than a week when it was launched in 2022.
Trump says DeepSeek’s breakthrough “could be good” for the US
US President Donald Trump says the latest developments in China’s AI industry could be good for America because they make the technology cheaper.
“If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that’s a good thing for us,” Trump told reporters on board Air Force One.
He also said he was not concerned about a breakthrough in China’s AI industry, adding the US will remain a dominant player in the field.
The US also says DeepSeek’s technology is a wake-up call for the US technology industry, after news of the Chinese startup’s latest AI model sparked a selloff in some US tech stocks.
“Hopefully, the release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win,” Trump told a Republican congressional retreat in Miami.
