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China's Open-Source DeepSeek Tops App Store; Nasdaq Futures Drop Amid Tech Selloff

Jan 27, 2025, 01:31 AM

Chinese AI startup DeepSeek has released its open-source AI model, DeepSeek R1, which has rapidly become the top free app on the US and Chinese Apple App Stores, surpassing OpenAI's ChatGPT. Developed in under two months at a cost of around $6 million and using less advanced chips due to US-led restrictions, DeepSeek R1 is reported to perform on par with leading AI models from OpenAI, Google, and Meta in areas such as math, reasoning, coding, and problem-solving. Built by a team of fewer than 200 people, the model's efficiency and rapid ascent are stirring concerns in Silicon Valley over the strength of America's lead in artificial intelligence, challenging the belief that AI dominance requires extensive budgets and advanced hardware. The release has impacted markets, with Nasdaq 100 futures falling over 2%, or more than 400 points, indicating pressure on tech-heavy stocks and potentially erasing up to $1 trillion in market capitalization. Nvidia's stock declined more than 5% in overnight trading, with a market cap loss of about $190 billion. Japanese chip-related stocks also tumbled, with Nvidia supplier Advantest dropping over 7%. DeepSeek's emphasis on resource efficiency and its use of reinforcement learning have prompted discussions about potential shifts in AI dominance, with some analysts likening DeepSeek's emergence to an AI 'Sputnik moment' for the United States.