China’s AI startup DeepSeek sends US tech stocks tumbling

Chinese startup DeepSeek has sent shockwaves through the global tech sector with the release of an artificial intelligence (AI) model whose capabilities rival the creations of Google and OpenAI.

DeepSeek-R1’s creator says its model was developed using less advanced, and fewer, computer chips than those employed by tech giants in the United States,  raising questions about the future of America’s AI dominance and the scale of investments US firms are planning.

US President Donald Trump called the rise of Chinese company DeepSeek “a wake-up call” for the US tech industry after the emergence of its AI model triggered shockwaves on Wall Street. Shares in major tech firms such as Nvidia fell sharply, with the chip giant losing almost $600bn in market value.

Trump said the latest developments in China’s AI industry may be “a positive” for the US. 

“If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that’s a good thing for us,” he told reporters on board Air Force One. He also said he was not concerned about the breakthrough, adding the US will remain a dominant player in the field.

DeepSeek has become the most downloaded free app in the US just a week after it launched. DeepSeek is powered by the open source DeepSeek-V3 model, which its researchers claim was trained for around $6m – significantly less than the billions spent by rivals. 

The company was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.

The 40-year-old, an information and electronic engineering graduate, also founded the hedge fund that backed DeepSeek. He was recently seen at a meeting between industry experts and the Chinese premier Li Qiang.