AI Shake-Up: DeepSeek’s Breakthrough Rattles Tech Stocks

Chinese AI startup DeepSeek has introduced its R1 model, causing a major shake-up in global tech stocks. The model, developed with significantly lower costs and computing power than its Western counterparts, has triggered market turbulence. Nvidia suffered a record-breaking $593 billion loss in market value—the largest single-day drop in U.S. history—while Microsoft and Alphabet also saw declines.

DeepSeek’s innovation leverages a "mixture of experts" approach, activating only the necessary computing power for specific tasks. This breakthrough challenges industry norms, potentially reducing AI development costs and energy consumption while increasing accessibility.

Some analysts are calling this AI’s "Sputnik moment," highlighting its potential to shift technological dominance. The news has prompted concerns over AI market valuations and forced major tech firms to reassess their strategies.

In response to the disruption, major AI players are expected to accelerate research and development efforts to maintain their competitive edge. Investors are closely monitoring how industry leaders will adjust to this emerging threat, with some speculating on possible collaborations or acquisitions to counter DeepSeek’s rapid rise. The AI sector, once dominated by a handful of U.S. tech giants, may now be entering a new era of heightened competition and global power shifts.