The US stock market has evaporated about 1 trillion USD after the Chinese tech startup DeepSeek launched its AI chatbot.
Investors are calling this the "Sputnik moment" for the world's AI superpowers. DeepSeek, a competitor to OpenAI and its ChatGPT tool, has shaken confidence in the AI boom in the US as the cost of developing AI applications is low but with similar performance.
After the trading session on January 27, the tech-heavy Nasdaq Composite index closed down 612 points (-3.1%) at 19,341 points. Nvidia's stock price (the American chip manufacturer) fell 17% and closed at 118.58 USD per share.
According to The Guardian, Google's parent company lost 100 billion USD and Microsoft lost 7 billion USD.
Meanwhile, Nvidia has "evaporated" nearly 600 billion USD in market capitalization in just one day, marking the largest loss in the history of the US stock market. Just a week ago, Nvidia surpassed Apple to become the world's most valuable publicly traded company.
It can be said that January 27 was the worst trading day for Nvidia's stock since March 16, 2020, at the onset of the COVID-19 pandemic.
In Japan, on January 28, Japanese tech companies related to the AI sector plummeted for the second consecutive day. Advantest's stock fell by more than 9%.
Technology investor SoftBank, a key investor in President Donald Trump's AI Stargate project, dropped more than 5% after losing 8% the day before.
Most other Asian markets rose in trading before the Lunar New Year holiday.
Making waves with its low-cost AI model, the AI assistant DeepSeek, from the startup of the same name in China, quickly dominated the download rankings on Apple's iPhone in the UK over the weekend (ranking ahead of OpenAI's ChatGPT).
DeepSeek's success in building an advanced AI model without accessing the most advanced technology from the US raises concerns about the effectiveness of Washington's efforts to curb China's high-tech industry.
As for OpenAI's CEO, Sam Altman praised the launch of DeepSeek, stating that "it's exciting to have a new competitor." In a social media post, Altman referred to DeepSeek as "an impressive model, especially regarding what they can offer at that cost."
At the end of January 27, DeepSeek announced it would temporarily limit new user registrations due to a cyber attack. After about two hours of monitoring, the company stated they were the victims of a "large-scale malicious attack."
While DeepSeek limited registrations, current users were still able to log in as usual.