DeepSeek Goes Deep: China's AI App Shaking Up US Markets

Mayhem · Jan 27, 2025

The app's rise has caused stock market disruptions, with shares of major U.S. tech companies reportedly declining.
Despite its success, DeepSeek faces challenges due to US export restrictions on advanced chips, which could hinder its growth.

Its open-source foundation, DeepSeek-V3, has sparked debate about the cost efficiency and scalability of AI development. Analysts warn that this could reshape the competitive dynamics of the AI industry, especially as US companies have heavily invested in more expensive infrastructure.

DeepSeek's emergence has rattled stock markets. Shares of US tech giants Nvidia, Microsoft, and Meta tumbled, while European companies like ASML and Siemens Energy reportedly faced double-digit declines.

Wall Street giant Citi, however, highlighted the challenges Chinese firms face, including limited access to advanced US chips, which could slow their momentum, according to the BBC. DeepSeek's success stems from innovative strategies by its founder, Liang Wenfeng, who stockpiled Nvidia A100 chips before US export restrictions took effect.

By combining these with more affordable hardware, Liang managed to cut costs without compromising on performance. This efficiency has fueled the app's rapid adoption and raised questions about the sustainability of high-cost AI projects in the US.