Tue Jan 28 00:31:37 UTC 2025: ## Chinese AI Chatbot Shakes Up US Tech Market, Sending Nvidia Stock Plunging

**New York/London** – The US tech sector experienced a significant downturn Monday, with shares of Nvidia, the leading AI chipmaker, plummeting 16.9% following the explosive popularity of DeepSeek, a Chinese AI chatbot app. The app, available for free download, quickly became the most downloaded free app in the US, raising concerns about the future of American AI dominance.

DeepSeek, developed at a reportedly minuscule fraction of the cost of its US rivals like OpenAI, utilizes open-source technology and reportedly cost around $6 million to train – a stark contrast to the billions invested by American competitors. This low-cost model, coupled with recent US restrictions on the export of advanced chips to China, has sparked anxieties among investors. The sudden success has been described as an “AI Sputnik moment” by Silicon Valley venture capitalist Marc Andreessen, echoing the Soviet Union’s 1957 satellite launch which jolted the US into action.

The market reaction was widespread. Broadcom, another chipmaker, fell 17.4%, while Microsoft and Alphabet (Google’s parent company) saw declines of 2.14% and over 4% respectively. European markets also felt the impact, with ASML and Siemens Energy experiencing significant drops.

Analysts attribute the market volatility to the potential disruption of the existing AI landscape. The low cost of DeepSeek raises concerns about the profitability of established players who have invested heavily in more expensive infrastructure. Some experts even suggest it could derail investment in the entire AI supply chain.

However, Wall Street’s Citi cautioned that despite DeepSeek’s potential to challenge American companies, challenges faced by Chinese firms, such as access to advanced chips, could ultimately hinder their long-term growth. DeepSeek itself announced it is temporarily limiting new registrations due to large-scale cyberattacks.

The app’s creator, Liang Wenfeng, reportedly amassed a significant stockpile of high-end Nvidia chips before export restrictions were implemented, allowing him to combine them with more readily available, less expensive components. His relatively low-cost approach highlights the innovative strategies employed by Chinese AI developers in the face of US export controls. The incident underscores the intensifying competition in the global AI market and the potential for rapid technological advancements from unexpected sources.

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