The introduction of the Chinese AI app DeepSeek has dramatically disrupted the U.S. tech industry, prompting fears about American superiority in AI. Described as AI's "Sputnik moment" by Marc Andreessen, the app swiftly became the most downloaded on Apple's US App Store and triggered a massive sell-off in major tech stocks. Notably, AI chipmaker Nvidia experienced a historic loss of nearly $600 billion in market value. The stark difference in development costs—DeepSeek’s mere $5.6 million versus OpenAI’s $5 billion—raises serious questions about the future of AI investment.
"DeepSeek-R1 is AI's Sputnik moment," he posted to X on Sunday, referring to the satellite which kicked off the space race.
By Monday, the new AI chatbot had triggered a massive sell-off of major tech stocks which were in freefall as fears mounted over America's leadership in the sector.
DeepSeek's developers say it built this latest model for a mere $5.6m. That is a tiny fraction of the cost that AI giants like OpenAI, Google, and Anthropic have relied on.
Many observers, investors, and analysts appeared stunned. Some wondered if this marked a buying opportunity. Others questioned the information DeepSeek was providing.
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