The Chinese app #DeepSeek shakes global stock markets
The recent emergence of DeepSeek, a Chinese artificial intelligence (AI) application, has significantly impacted global stock markets, particularly affecting major U.S. technology companies. Developed by the Chinese AI company DeepSeek, the app has rapidly gained popularity, surpassing established platforms like ChatGPT in various app stores. This swift ascent has led investors to reassess the competitive landscape in the AI sector, resulting in notable market volatility.
On Monday, January 27, 2025, key U.S. tech stocks experienced substantial declines. Nvidia's stock plummeted by approximately 17.6%, marking the largest single-day loss in U.S. market history, with a reduction of $465 billion in market value. The Nasdaq Composite dropped by 3.3%, and the S&P 500 decreased by 1.9%, marking its worst performance in over a month. In contrast, the Dow Jones Industrial Average saw a marginal decline of 0.1%, indicating that the downturn was primarily concentrated in the tech sector.
DeepSeek's AI model has been developed at a fraction of the cost compared to its Western counterparts, challenging the dominance of established U.S. tech firms in the AI industry. This development has raised concerns among investors about the future market share and profitability of these companies. The app's rapid rise has been described as "AI's Sputnik moment," highlighting the potential shift in technological leadership.
The impact of DeepSeek's emergence extends beyond U.S. markets. Global technology stocks have faced significant sell-offs, with up to $1 trillion wiped from U.S. stock markets. Companies such as ASML, SoftBank Group, and Constellation Energy have also experienced notable declines. Investors are now closely monitoring the responses of major tech companies like Microsoft, Meta, Tesla, and Apple to this new competitive threat.
