DeepSeek Shakes Up AI Market: A Looming Threat to US Tech Giants

A Chinese startup, DeepSeek, has disrupted the global AI market, causing significant losses for US tech giants. Its new R1 chatbot reportedly offers advanced performance at lower costs, challenging the dominance of established players such as Nvidia, Microsoft, and Alphabet.

Nvidia, the prominent AI microchip maker, experienced a record-breaking one-day loss, with nearly AUD 1 trillion (USD 600 billion) erased from its value. This drastic drop was triggered by the emergence of DeepSeek, a Chinese startup, which unveiled its ground-breaking R1 chatbot.

DeepSeek's R1 chatbot, reportedly more advanced and economical than its competitors, sent shockwaves through the tech industry. The app has rapidly climbed to the top of Apple's free download list, redefining market expectations and sparking fears among investors about the future competitiveness of US tech giants.

Founded by Chinese hedge fund High Flyer, DeepSeek specializes in large language models and AI tools, challenging established norms with its cost-effective and less data-intensive technologies. Amidst rising concerns over data privacy and geopolitical risks, the new landscape poses significant questions about the future of AI and tech stock valuations.

(With inputs from agencies.)