Nvidia stock crashes after deepseek AI model threatens American supremacy
- Investors reacted to the emergence of DeepSeek, a Chinese AI company, leading to significant sell-offs in the tech sector.
- Nvidia, a major supplier for AI technology, saw its shares fall by nearly 17%, reflecting broader market fears about competition.
- The incident signifies a crucial shift in the AI landscape, prompting calls for American tech firms to enhance their competitive strategies.
In January 2025, the emergence of a new low-cost artificial intelligence model from a Chinese start-up called DeepSeek triggered significant turmoil within the American tech industry, causing a major sell-off in technology stocks. Among the most affected was Nvidia, a leading manufacturer of AI processors, which saw its stock drop nearly 17 percent. This decline effectively resulted in a loss of about $589 billion in market capitalisation. The release of DeepSeek's R1 model, claimed to match benchmarks set by OpenAI's popular GPT models, raised alarms among U.S. companies that had heavily invested in AI development, as DeepSeek's approach is based on utilizing fewer computing resources and offering more competitive pricing. The introduction of DeepSeek's R1 model shocked industry observers as it not only claimed to rival existing models such as OpenAI's but also became available for free download, capturing the attention of users quickly. The new AI app ascended to the top of the U.S. iPhone App Store's free apps category shortly after its release. As discussions surrounding AI and its implications for both national security and economic competitiveness intensified, key figures in the tech industry began to voice concerns. U.S. President Donald Trump labelled this emergence a