Amid the AI boom, the launch of a brand-new Chinese AI model sent shockwaves across the league of big tech companies, shaking their economy by wiping nearly $1.2 trillion from the market capitalization of the world’s largest tech firms, including NVIDIA.
DeepSeek AI: Nightmare for Tech Giants
The unexpected emergence of DeepSeek AI, a cutting-edge assistant developed in China, has outperformed leading US-based AI models at a fraction of the cost.
According to reports, Nasdaq 100 futures witnessed a 4% decline on Monday morning. Tech heavyweights also took a big hit, with Nvidia suffering a staggering 12% decline, Microsoft sliding more than 6%, and Amazon falling over 5%. Alphabet, Meta, and Tesla all braced for losses exceeding 4% as trading hours approached.
The ripple effect was also seen beyond Wall Street. In Europe, Siemens Energy plunged 21% by midday CET, the company which once considered a frontrunner in AI-driven industrial solutions. Tokyo-listed SoftBank, a key investor in Trump’s Stargate AI startup, recorded an 8% drop.
The market turmoil triggered from concerns that DeepSeek’s rapid development and speed challenge the Silicon Valley model, which relies on exorbitant capital expenditures and long development cycles.
“It is deeply problematic for the thesis that the significant capital expenditure and operating expenses that Silicon Valley has incurred is the most appropriate way to approach the AI trend,’ stated Nirgunan Tiruchelvam, head of consumer and internet at Aletheia Capital. “It calls into question the massive resources that have been dedicated to AI.”
Shift in AI Policy with Trump’s New Administration
Last week, Donald Trump signed a new executive order, revoking Joe Biden’s policy what he calls “barriers to American AI innovation.” The order revokes key provisions of the Biden administration’s AI framework and signals a shift in regulatory oversight to prioritize economic competitiveness and national security over what Trump describes as “engineered social agendas.”
Source: https://www.deepseek.com/
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