China’s DeepSeek AI Shakes Industry, Dents America’s Dominance 

China’s DeepSeek AI is making waves in the tech industry, challenging America’s dominance and signaling a shift in global artificial intelligence power.

The rapid impact of the new Chinese AI app DeepSeek on the technology industry, markets, and America’s confident stance in artificial intelligence is truly remarkable.

Venture capitalist Marc Andreessen perhaps put it most aptly when he posted on X this Sunday, “DeepSeek-R1 is AI’s Sputnik moment,” alluding to the satellite that sparked the space race.

Over the weekend, DeepSeek emerged as the most downloaded free app on Apple’s US App Store. By Monday, this new AI chatbot had sparked a significant sell-off of major tech stocks, which plummeted amid growing concerns about America’s leadership in the sector.

Shares of Nvidia, an AI chip designer and a recent favorite on Wall Street, plummeted by 17% when US markets closed on Monday. To put it more dramatically, the company lost almost $600 billion in market value—an unprecedented drop in the history of the US stock market according to Bloomberg.

The primary reason for this remarkable and historic unsettlement can largely be traced back to the issue of cost, along with a statement made by DeepSeek’s developers that raised serious questions in Silicon Valley.

While ChatGPT creator OpenAI has been losing money, with expenditures reaching $5 billion last year alone, DeepSeek’s developers claim they constructed their latest model for just $5.6 million.

That represents only a small portion of the expenses that major AI companies such as OpenAI, Google, and Anthropic have incurred to build their own models.

During this pivotal moment for the sector, a notable silence enveloped many parts of Silicon Valley when I reached out to those who are typically eager to converse. A number of observers, investors, and analysts seemed genuinely taken aback.

Some speculated whether this was a good time to buy, while others doubted the accuracy of information provided by DeepSeek.

“I believe the real story is still hidden beneath the surface regarding what’s truly happening,” veteran analyst Gene Munster commented to me on Monday. He expressed skepticism about DeepSeek’s reported financials, questioning whether the startup was receiving subsidies or if their figures were accurate.

“The chatbot is unexpectedly impressive, making it difficult to believe,” he remarked.

Regardless, DeepSeek’s sudden appearance is a “display of power” by China and a “setback for US technology,” as he described it.

It was only last week that OpenAI’s Sam Altman and Oracle’s Larry Ellison appeared alongside President Donald Trump at a news conference that essentially resembled a press release.

The event epitomized the height of American optimism regarding AI.

They unveiled Stargate, a collaborative venture aimed at securing up to $500 billion in private investment for AI infrastructure. This initiative includes the development of data centers in Texas and other locations, with an anticipated creation of 100,000 new jobs.

The US appeared confident that its numerous data centers and control over cutting-edge chips provided a significant advantage in AI, despite China’s stronghold on rare-earth metals and engineering expertise.

Some have even regarded it as a foregone conclusion that America would lead in the AI race, despite high-profile warnings from top executives cautioning against taking the country’s advantages for granted.

The US might continue to dominate the industry, but it seems that DeepSeek has somewhat diminished its confidence.

Trump’s remarks following the recent sudden rise of the Chinese app likely provided little solace to Altman and Ellison. Describing this development as a “wake-up call” for the American tech industry, he stated that discovering more cost-effective methods for AI is ultimately beneficial.

It’s important to mention that on Monday, not only tech stocks suffered losses; energy stocks were hit as well. DeepSeek’s emergence has challenged many long-standing assumptions about the requirements for AI development.

Perhaps the nuclear renaissance, including reigniting America’s Three Mile Island energy plant, won’t be necessary. It might not require as much capital, computing power, and resources after all.

At present, the future of major semiconductor companies such as Nvidia is uncertain.