US stocks fell sharply on Monday due to the unexpected rise of Chinese AI company DeepSeek, which unveiled its R1 model—capable AI at a fraction of the cost of American counterparts. With only $5.6 million spent on developing R1, compared to billions by US firms, this development raised concerns about the dominance of the US technology sector. The S&P 500 and Nasdaq experienced significant losses, highlighting fears about competitive pressures from emerging firms like DeepSeek, despite US efforts to restrict AI chip supplies to China.
"That sent shockwaves through markets, in particular the tech sector, on Monday," the article notes, reflecting the immediate impact of DeepSeek's revelation on US tech stocks.
"DeepSeek was able to achieve its low-cost model on under-powered AI chips," illustrating the significant implications of its advancements despite US restrictions on technology supply.
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