DeepSeek erases almost $1 trillion from US market!

On Monday, January 27, 2025, the U.S. technology sector experienced a significant downturn, with over $1 trillion in market capitalization wiped out.

According to The Guardian, this decline was primarily attributed to the emergence of DeepSeek, a Chinese artificial intelligence (AI) startup that unveiled an advanced chatbot, intensifying global competition in the AI industry.

DeepSeek’s chatbot has demonstrated capabilities comparable to leading AI models like OpenAI’s ChatGPT but operates with significantly fewer resources.

This development has raised concerns about the U.S.’s leading position in AI advancements.

Notably, Nvidia, a prominent player in AI hardware, saw its stock plummet by 17%, marking one of the most substantial single-day losses in its history.

The ripple effects of DeepSeek’s announcement extended beyond Nvidia.

Major tech companies, including Alphabet (Google’s parent company), Microsoft, and Tesla, also faced significant stock declines.

The Nasdaq 100 index dropped by 3%, erasing nearly $1 trillion in value and bringing it back to levels seen at the beginning of the year.

DeepSeek’s AI model, named R1, has outperformed existing models in various benchmarks.

The company, founded by entrepreneur Liang Wenfeng in Hangzhou, emphasizes research and offers its assistant and underlying code for free.

This approach challenges the prevailing notion that significant investments in AI infrastructure are necessary, potentially reshaping valuations in the U.S. tech sector.

Former President Donald Trump described DeepSeek’s emergence as a “wake-up call” for U.S. tech firms, urging them to bolster their competitive efforts.

He emphasized the need for the U.S. to maintain its leadership in AI and technology sectors.

As the global AI landscape evolves at a rapid speed, the rise of DeepSeek AI underscores the intensifying competition and the necessity for established tech companies to innovate continually and not just hold conferences to capture investors.

DeepSeek erases almost $1 trillion from US market!