Beijing, China: The launch of the Chinese AI app DeepSeek has sent shockwaves through the global tech industry, shaking the markets and calling into question America’s long-held dominance in artificial intelligence (AI).
Venture capitalist Marc Andreessen described the moment as “AI’s Sputnik moment,” likening it to the satellite launch that triggered the space race.
Over the weekend, DeepSeek became the most downloaded free app on Apple’s US App Store. By Monday, it had triggered a massive sell-off in major US tech stocks. Nvidia, the AI chip designer and recent Wall Street favorite, suffered the largest single-day loss in US stock market history, shedding nearly $600 billion in market value—a 17% drop.
The shock stems largely from DeepSeek’s claim that it developed its latest AI model for just $5.6 million, a fraction of the billions spent by US tech giants like OpenAI, Google, and Anthropic. OpenAI, for instance, reported spending $5 billion last year alone.
DeepSeek’s disruptive approach is rooted in cost efficiency. The company says it used existing technology and open-source software to develop its AI model, which anyone can use for free.
However, reports suggest its founder Liang Wenfung’s hedge fund, High-Flyer, had been stockpiling GPUs, the core components of AI systems, for years. The app utilized Nvidia’s H800 chips, bypassing US restrictions on higher-powered GPUs.
The timing of DeepSeek’s arrival is particularly jarring for the US Just days ago, President Donald Trump joined AI leaders Sam Altman of OpenAI, Larry Ellison of Oracle, and Masayoshi Son of SoftBank to announce “Stargate,” a $500 billion private investment initiative in AI infrastructure, including new data centres and 100,000 jobs in Texas.
The US appeared confident in its commanding lead in AI, fuelled by advanced data centres and top-tier chips.
Trump, now faced with DeepSeek’s sudden success, called it a “wake-up call” for the US tech sector, emphasizing the importance of cost-efficient AI. Meanwhile, Sam Altman acknowledged DeepSeek’s quality in a late-night post on X (formerly Twitter), calling it “impressive” but promising that OpenAI would deliver better models. He added, “It’s invigorating to have a new competitor!”
DeepSeek’s emergence has also rattled energy stocks, as the app challenges assumptions about the capital, compute, and power required for advanced AI. The development may undermine the need for a nuclear energy renaissance, such as the proposal to restart the Three Mile Island plant in the US
Some investors see this as a buying opportunity, while others remain cautious. Regardless, DeepSeek’s success has reignited the AI race and forced the US to reevaluate its strategies. With its low-cost model and China’s growing influence, DeepSeek has marked a dramatic turning point in the global AI landscape.
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