Tech stocks have plunged around the world after a China AI start-up unveiled a new chatbot that threatens to match its major global competitors at a lower cost.
DeepSeek’s new artificial intelligence chatbot has triggered market turmoil that could wipe more than $1.2 trillion (£960bn) off technology companies at the opening bell in New York later.
According to The Telegraph, It has soared to the top of the Apple Store’s download charts as it stunned industry insiders with its ability to match its US competitors.
The Nasdaq in New York plunged more than 3pc in premarket trading as DeepSeek said it had spent only $5.6m (£4.5m) developing its model – peanuts compared to the billions US tech giants have poured into AI.
William Beavington of Jefferies said: “What’s particularly remarkable to us really is the cost-effectiveness and the efficiency they have driven from the chips being used.”
Shares in major tech firms in the US and Japan have tumbled, with chip-making giant Nvidia down more than 10pc in premarket trading, having closed down more than 3pc on Wall Street on Friday.
If the losses hold, this would wipe nearly $400bn (£319bn) off the value of the world’s dominant supplier of AI hardware and software.
Japanese tech conglomerate SoftBank was down more than 8pc overnight, less than a week after it was announced as a key investor in US President Donald Trump’s new $500bn (£401bn) venture to build infrastructure for artificial intelligence in the United States.
DeepSeek was developed by a start-up based in the eastern Chinese city of Hangzhou, known for its high density of tech firms.
Tech stocks around the globe have experienced a significant decline following the announcement of a new chatbot by a Chinese AI start-up, DeepSeek. This development poses a competitive threat to major global players due to its lower operational costs.
DeepSeek’s artificial intelligence chatbot has stirred market turmoil, potentially leading to a loss of over $1.2 trillion (£960 billion) in technology company valuations when trading opens in New York.
The new chatbot has skyrocketed to the top of the Apple Store’s download charts, impressing industry insiders with its capabilities that rival those of its U.S. counterparts.
In premarket trading, the Nasdaq in New York dropped more than 3% after DeepSeek revealed that it spent only $5.6 million (£4.5 million) to develop its model, a small fraction compared to the billions that U.S. tech giants have invested in AI.
William Beavington from Jefferies commented, “What’s particularly remarkable to us is the cost-effectiveness and efficiency they have achieved with the chips being used.
DeepSeek was established in 2023 by Liang Wenfeng, the leader of the AI-driven quantitative hedge fund High-Flyer.
The organization is dedicated to developing open-source AI models, which enables the broader developer community to examine and enhance the software.
Following its release in early January, DeepSeek’s mobile application rapidly ascended to the top of the iPhone download charts in the United States.
This application differentiates itself from other chatbots, such as OpenAI’s ChatGPT, by providing an explicit articulation of its reasoning prior to delivering a response to user prompts.
The company asserts that the R1 release demonstrates performance comparable to the latest offerings from OpenAI.
Furthermore, DeepSeek has extended licensing opportunities for individuals interested in leveraging its technology to develop their own chatbots.
In terms of comparative analysis, although the details provided by the company are not exhaustive, it appears that the costs associated with training and developing DeepSeek’s models are significantly lower than those required for the leading products from OpenAI or Meta Platforms Inc.
The enhanced efficiency of this model raises questions regarding the necessity of substantial financial investments in cutting-edge AI accelerators from manufacturers such as Nvidia Corp.
This situation has intensified scrutiny concerning U.S. export restrictions on advanced semiconductors to China, which were instituted to prevent potential breakthroughs similar to those that DeepSeek seems to represent.ors from manufacturers such as Nvidia Corp.
This situation has intensified scrutiny concerning U.S. export restrictions on advanced semiconductors to China, which were instituted to prevent potential breakthroughs similar to those that DeepSeek seems to represent.
