Global Tech Stocks Plunge as Chinese AI DeepSeek Gains Traction

The latest AI breakthrough by Chinese startup DeepSeek has sent shockwaves through global tech markets, leading to significant declines in major U.S. and European technology stocks.

The S&P 500 dropped 1.71%, closing at 5981.64 points, compared to 6101.24 the previous day. Heavy losses were recorded across major players:

NVIDIA: -16.55% (a staggering $500 billion wiped out in a single day)
Broadcom: -18%
Oracle: -13.21%
Alphabet: -3.36%
Amazon: -1.3%

Nasdaq was also down 3.5%, reflecting widespread investor concerns about the viability of AI-related investments.

DeepSeek has demonstrated that powerful AI models can be built at a fraction of the traditional computational cost. This undermines the core business model of hardware giants like NVIDIA and ASML, which rely heavily on high-demand markets for advanced computing infrastructure.

DeepSeek's latest model, R1, is said to match or outperform premium AI tools like OpenAI’s $20/month GPT-o1 in tasks like mathematics, coding, and logical reasoning—all while using significantly fewer resources. The app quickly became the most downloaded free app for iPhones, even surpassing ChatGPT.

Despite its success, DeepSeek has faced challenges, including temporary service disruptions caused by malicious attacks, leading the company to limit new user registrations.

Founded in 2023 by Liang Wenfeng, former head of the quantum hedge fund High-Flyer, DeepSeek focuses on open-source AI models. Its R1 model is unique in how it formulates reasoning before delivering responses, setting it apart from competitors like ChatGPT or Meta AI.

Prominent investor Marc Andreessen hailed DeepSeek as "one of the most astonishing and impressive breakthroughs in recent memory."

The implications of DeepSeek’s rise extend beyond hardware manufacturers to Big Tech companies like Microsoft, Google, and others heavily invested in AI development. The collapse in NVIDIA’s stock—down 12% in pre-market trading—highlights fears that the AI race’s bottleneck is shifting away from computational power to smarter, resource-efficient innovations.