Chinese AI startup DeepSeek surged to the top of the American App Store over the weekend, overtaking OpenAI’s ChatGPT as the most popular AI assistant in the US. The previously unknown app’s sudden, explosive debut has left the US stock market reeling, raising concerns about future American dominance in the AI sector.
Launched on January 10, DeepSeek’s app leverages the DeepSeek-V3 model, reportedly developed for less than $6 million— a fraction of the cost incurred by its American counterparts. Deepseek also utilizes a new energy-efficient system, dramatically reducing the power consumption required to operate its servers.
Following DeepSeek’s launch, nuclear energy stocks, including Oklo Inc. and NuScale Power Corporation, suffered steep declines of 16.3% and 13.7%, respectively, as the market reevaluates the energy demands of AI applications and their potential impact on nuclear investments.
Power companies such as Constellation Energy and Vistra Corp also experienced notable losses, with declines exceeding 14%, raising concerns over the anticipated energy requirements for AI data centers.
Analysts suggest that the reduced energy consumption projected by DeepSeek’s model could diminish the expected demand for nuclear power as a key energy source for AI.
This development underscores the effectiveness of DeepSeek’s open-sourced approach and its competitive pricing, offering capabilities comparable to OpenAI’s models for free.
The rise of DeepSeek has also sparked discussions about the effectiveness of US export controls on advanced technology, as the startup managed to use Nvidia’s H800 chips for training.
Nvidia experienced a historic stock market plunge due to investor concerns over the Chinese AI startup DeepSeek, which recently unveiled a large language model at a fraction of the cost of its American counterparts. The company’s shares dropped as much as 17%, erasing approximately $600 billion in market capitalization and marking the largest single-day loss in history.
This shift has knocked Nvidia from its position as the world’s most valuable company, with its valuation falling from $3.49 trillion to $2.89 trillion.
This shift could alter the competitive landscape in AI, as American tech firms express concerns over their market position. Investors are questioning the sustainability of high valuations in the tech sector, which previously thrived on AI advancements, with estimates suggesting a combined market value loss exceeding $1 trillion across U.S. tech.
Overall, DeepSeek’s success signifies a significant challenge to established American AI companies and highlights the evolving dynamics of global tech competition.
The situation has sparked wider market volatility, affecting semiconductor stocks and raising questions about the sustainability of their recent surge.
Overall, this disruption highlights a shift in the competitive landscape of the AI sector and its implications for energy markets.
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Connor Walcott is the lead writer for Valuetainment.com. Follow Connor on X and look for him on VT’s “The Unusual Suspects.”
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