Chinese AI disruptor DeepSeek hits global markets

Chinese AI disruptor DeepSeek hits global markets
Chinese AI disruptor DeepSeek hits global markets

Chinese AI startup DeepSeek has disrupted global markets with the launch of its latest artificial intelligence models, causing significant drops in tech stocks, particularly affecting Nvidia, whose shares fell 15% mid-day. The semiconductor index declined 8.5% following the news.

DeepSeek claims its models match or exceed the performance of leading U.S. models like OpenAI and Meta's offerings while operating at 20 to 50 times lower costs. The company's DeepSeek-V3 model reportedly surpasses open-source models like Llama-3.1-405B and competes with top closed-source models GPT-4o and Claude-3.5-Sonnet. Their newer DeepSeek-R1 model, released at the 2025 World Economic Forum, was developed for just $5.6 million, considerably less than the billions invested by U.S. tech giants.

The Hangzhou-based startup, controlled by High-Flyer hedge fund co-founder Liang Wenfeng, has gained attention from Chinese leadership. Liang recently attended a closed-door symposium with Chinese Premier Li Qiang, suggesting the company's strategic importance to Beijing's tech self-sufficiency goals amid U.S. export controls.

The development has sparked diverse reactions. Nvidia stated that DeepSeek's advances demonstrate the importance of their chips in the Chinese market. Nasdaq Vice Chairman Robert McCooey highlighted DeepSeek's significance in the AI revolution. Former U.S. President Donald Trump called it a "wake-up call" for American industries, praising the cost-effective approach to AI development.

Questions have emerged about DeepSeek's use of Nvidia chips, which are banned from sale to Chinese companies. The company has topped the Apple App Store's free downloads in the U.S., surpassing ChatGPT, while causing market analysts to reevaluate assumptions about AI infrastructure investments.