Chinese AI chatbot's rise slams US tech stocks
The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling


What happened
The soaring popularity of a new AI chatbot from Chinese startup DeepSeek, plus the company's low-cost and high-performance advances in AI development, sent U.S. tech stocks tumbling Monday. Chipmaker Nvidia's shares slumped 17%, wiping out $600 billion in market value, the biggest one-day loss ever for a public company. The Nasdaq lost 3%, or roughly $1 trillion.
Who said what
DeepSeek's AI assistant, released Jan. 10, became the top free app on U.S. iPhones Monday. Based on the company's V3 model, it is the first Chinese AI chatbot that impressed Silicon Valley, performing on par or better than OpenAI's ChatGPT. What roiled Wall Street was that "DeepSeek said it trained its AI model using about 2,000 of Nvidia's H800 chips," The Washington Post said, far fewer than the 16,000 more-advanced H100 chips typically used by the top AI companies.
Analysts noted that DeepSeek's founder amassed thousands of Nvidia's flagship H100 chips before the Biden administration blocked their export to China, and many were skeptical of the V3 model's purported $5.6 million development cost. But "the upshot is that the AI models of the future might not require as many high-end Nvidia chips as investors have been counting on" or the giant data centers companies have been promising, The Wall Street Journal said. The "big moment for DeepSeek" arrived last week when it released its R1 model, which "dazzled" experts with an "ability to reason tough problems in ways that rivaled — and some say, surpassed — OpenAI's capabilities," for a fraction of the cost. "DeepSeek R1 is AI's Sputnik moment," venture capitalist Marc Andreessen said on X.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
What next?
DeepSeek's success threatens to "upset the technology world order," toppling America's AI dominance, Reuters said. But Wall Street's panicked selloff "seems overblown," Bernstein Research analyst Stacy Rasgon said Monday.
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
How will the new Repayment Assistance Plan for student loans work?
the explainer The Repayment Assistance Plan (RAP) will replace existing income-driven repayment plans
-
In the Spotlight Venezuelan President Nicolás Maduro has been at odds with US forces
-
Music reviews: Ethel Cain, Amaarae, and The Black Keys
Feature "Willoughby Tucker, I'll Always Love You," "Black Star," and "No Rain, No Flowers"
-
Is Trump America's CEO?
Talking Points The party of free enterprise turns to 'cronyism'
-
Trump said to seek government stake in Intel
Speed Read The president and Intel CEO Lip-Bu Tan reportedly discussed the proposal at a recent meeting
-
US to take 15% cut of AI chip sales to China
Speed Read Nvidia and AMD will pay the Trump administration 15% of their revenue from selling artificial intelligence chips to China
-
Why 'faceless bots' are interviewing job hunters
In The Spotlight Artificial intelligence is taking over a crucial part of recruitment
-
DORKs: The return of 'meme stock' mania
Feature Amateur investors are betting big on struggling brands in hopes of a revival
-
NFL gets ESPN stake in deal with Disney
Speed Read The deal gives the NFL a 10% stake in Disney's ESPN sports empire and gives ESPN ownership of NFL Network
-
How is AI reshaping the economy?
Today's Big Question Big Tech is now 'propping up the US economy'
-
Is Trump's tariffs plan working?
Today's Big Question Trump has touted 'victories', but inflation is the 'elephant in the room'