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A young Chinese AI-startup, Deepseek, led a huge routine in American technology shares on Monday such as its very competitive and potentially shocking cost-effective models doubted doubts about the hundreds of billions of dollars that spend the largest technology companies in artificial intelligence.
The rise of Deepseek is the trust of investors in the AI story that has lifted the American bullmarkt for the past two years. It calls the hype surrounding the chips of Nvidia and threw all the way through the market to touch the shares of power producers who were set to boost the demand for AI Datacenter.
This is how the deep market sales on Wall Street unfolded:
New reasoning model
Deepseek was founded in May 2023 by Liang Wenfeng, who partially financed the company through its AI-driven hedge fund. At the end of December, the AI developer launched a free, open-source large language model that it said It took only two months to develop and to convert less than $ 6 million.
On January 20, the Deepseek R1, based in Hangzhou, released R1, a reasoning model that exceeds the latest O1 model of Open AI in many third-party tests.
Deepseek wants to distinguish his competitors with his reasoning options, which means that the model before the last answer is delivered, first one “Chain of Thought” To improve the accuracy of his answers.
Best performing model
The buzz around Deepseek’s R1 apparently picked up steam after Alexandr Wang, CEO of Scale AI, praised his competitiveness against the best products of the American Megacap -Tech giants, which were thought to led the AI war. Scale AI offers data to help companies train their AI tools.
“What we have found is that Deepseek is that the leading Chinese AI Lab, their model is actually the best performing, or roughly the same as the best American models,” said Wang on CNBC of the World Economic Forum in Davos, Switzerland, Last week.
Wang said that Deepseek actually has more H100 chips from Nvidia than expected – about 50,000 of them. Those chips are the favorite processor for AI companies in the US such as OpenAi, and the US has banned the sale of advanced AI chips to China.
Nvidia shares took a 3% hit on Friday when Chatter started to pick up over Deepseek.
No. 1 app
During the weekend the hype around Deepseek reached a fever on social media.
Marc Andreessen, co-founder and general partner of risk capital company Andreessen Horowitz, sang Deepseek’s praise on X and said that the R1 model “is one of the most amazing and impressive breakthroughs” that he has ever seen. The Andreessen portfolio includes Airbnb and dozens of AI companies.
Tech Investor Chamath Palihapitiya pointed to the “very good” Deepseek report, which said that his R1 model “Intentively cracked one of the holy grails of AI: models step in step by step without trusting mass guided datas sets . “
The Chinese AI app Deepseek can be seen in Apple’s US App Store on an iPhone 12, 27 January 2025. In the ranking of free apps, Deepseek was even for Chatgpt from OpenAi.
Photo Alliance | Getty images
At this point, the mobile app rose from Deepseek to the top of Apple‘s App Store Download Charts in the US weekend, which marks a tangible threat for more expensive models such as OpenAi’s Chatgpt.
The American futures were large at night on Sunday and investors woke up with a sea of red Monday morning.
Nasdaq Composite, 1-day
Ai Darling and Chip Producer Nvidia Did the shares that tumble more than 12% on Monday, on schedule for the worst day since March 2020.
Nvidia, 1-day
Other chip makers and power providers were hit great. The tech-heavy Nasdaq Composite No less than 3.6% fell on Monday, dragged down by Megacap names.