World.Alpha-News.org ➤ The news of the world is here

Shares in major US technology firms have plummeted in response to the sudden popularity of a low-cost chatbot developed by a Chinese AI company.

The DeepSeek app, launched just last week, has quickly outperformed competitors like ChatGPT to become the top downloaded free app in the United States.

On Monday, shares of prominent US-based tech companies involved in AI, such as Nvidia, Microsoft, and Meta, were all down as US markets prepared to open.

Despite being developed at a fraction of the cost of its competitors, using the open-source DeepSeek-V3 model, industry experts are questioning the future of American AI supremacy and the scale of investments made by US firms.

However, this claim has been met with skepticism within the AI community.

DeepSeek's rise coincides with the US limiting the sale of advanced chip technology, crucial for AI, to China.

As a result, Chinese AI developers have collaborated and experimented with innovative approaches, leading to more cost-effective AI models that demand significantly less computing power than before, potentially disrupting the industry.

After the successful launch of DeepSeek-R1 earlier this month, comparisons were drawn between its performance and cutting-edge models from competitors like OpenAI when used for tasks such as math, coding, and language processing.

This disruptive debut has rattled markets with companies like ASML and Siemens Energy seeing significant declines in their share prices.

Fiona Cincotta, a senior market analyst at City Index, noted, "This concept of a low-cost Chinese alternative caught the market somewhat off guard, raising concerns about rivals' profitability given their substantial investments in pricier AI infrastructure."

Vey-Sern Ling, a technology equity advisor based in Singapore, expressed concerns to the BBC stating that it could "potentially disrupt the investment landscape for the entire AI supply chain."

While acknowledging DeepSeek's potential to challenge American AI giants, Citi warned that challenges faced by Chinese companies could impede their progress due to the advantage US firms hold in accessing advanced chips.

Founded in Hangzhou, Southeastern China, in 2023 by Liang Wenfeng, DeepSeek was financially backed by his hedge fund.

Liang was recently in the limelight during a meeting with Chinese Premier Li Qiang where he commented on the unforeseen sensitivity surrounding pricing, stating, "We were merely focused on our cost calculations when setting prices."

Additional contributions by Joao Da Silva and Dearbail Jordan.