US stocks plunged Monday, with the Nasdaq dropping 3.1% and the S&P 500 falling 1.5%, following a groundbreaking announcement by Chinese AI startup DeepSeek. Nvidia, the chipmaking giant, saw nearly $600 billion wiped from its market value as investors reacted to DeepSeek’s cost-efficient AI model, R1, which rivals ChatGPT at a fraction of the cost.
DeepSeek revealed that its model was developed for just $5.6 million, dwarfing the billions US tech giants like Meta and OpenAI spend annually on AI. The news disrupted the tech-heavy Nasdaq but buoyed the Dow, which rose 0.7%, supported by healthcare and consumer companies less vulnerable to AI-driven upheavals.
Prominent investor Marc Andreessen called DeepSeek’s achievement “one of the most impressive breakthroughs I’ve ever seen,” further amplifying concerns over the US’s ability to maintain its AI dominance despite chip export restrictions aimed at China.
