A Chinese artificial intelligence startup, DeepSeek, made significant moves in global technology stocks on Monday, sparking discussions about the future of America’s technological leadership.
Over the weekend, excitement surged around DeepSeek’s newest AI model, acclaimed for its cost-efficiency on lower-capability chips. This development raises questions about the lofty valuations of companies like Nvidia. Released last week by the Chinese company, the product now leads Apple’s App Store rankings.
“DeepSeek shows that it is possible to develop powerful AI models that cost less,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It can potentially derail the investment case for the entire AI supply chain, driven by high spending from a small handful of hyperscalers.”
Founded by quant fund creator Liang Wenfeng, the app’s AI model is considered on par with the latest from OpenAI and Meta Platforms. Investor Marc Andreessen hailed it as “one of the most remarkable and impressive breakthroughs.” DeepSeek’s assistant demonstrates its process and reasoning when responding to user queries or prompts. This feature has been praised in reviews on both Apple’s App Store and Alphabet’s Play Store.
Nasdaq 100 futures dropped by up to 1.9%, while S&P 500 contracts decreased by as much as 1%. These declines extend Friday’s cash session losses, as U.S. stocks retreated following earlier gains when President Donald Trump assumed office.
Meanwhile, stocks rose in Hong Kong, with the Hang Seng Tech Index increasing by up to 2% in anticipation of the Lunar New Year holidays this week. Chinese AI-related stocks like Merit Interactive Co. soared to their daily limits. Merit stands out for its strong connections to DeepSeek, having previously announced that it integrated the homegrown AI firm’s model into its marketing strategies.
