Wed Jan 29 08:43:03 IST 2025: ## Chinese AI Startup Triggers Record-Breaking Stock Market Volatility

**New York, NY** – The release of a cost-effective artificial intelligence model by Chinese firm DeepSeek sent shockwaves through the US stock market on Monday, causing a massive selloff led by Nvidia, which lost a record $589 billion in market capitalization. However, a dramatic rebound on Tuesday saw Nvidia recover almost half of its losses, adding $260 billion to its valuation – the second-best one-day gain in stock market history.

The DeepSeek model, R1, is reportedly comparable in performance to models from OpenAI and Meta, but significantly cheaper to develop. This sparked concerns among investors that the AI investment cycle might be overhyped and that cheaper alternatives could disrupt the market dominance of US tech giants. Analyst reactions were mixed, with some characterizing Monday’s losses as excessive and others warning of potential deflationary pressures and further export controls.

Nvidia, a major beneficiary of the AI boom, wasn’t the only company impacted. Oracle also suffered heavy losses, while Apple, surprisingly, saw its stock rally, benefiting from its more cautious approach to the generative AI arms race. Morgan Stanley analysts dubbed Apple a “relative winner,” highlighting its strong consumer technology distribution platform.

The unexpected success of DeepSeek fueled debate about the future of the AI industry. Some, like President Trump, viewed it as a wake-up call for US industries to innovate faster and more cost-effectively. Others, such as OpenAI CEO Sam Altman, acknowledged DeepSeek’s achievement while expressing confidence in OpenAI’s future offerings. The event has been likened to a “Sputnik moment” for American AI, highlighting the intensifying competition with China.

While the immediate impact on major tech companies was significant, the long-term consequences remain uncertain. The volatility underscored the intertwined nature of the global tech market and the growing influence of Chinese technological advancements. The coming days will be crucial, with several major tech companies due to release their fourth-quarter earnings reports.

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