The Dow Jones, NASDAQ, and S&P 500 began Monday with significant losses as technology stocks plunged following the unveiling of China’s DeepSeek R1 artificial intelligence (AI) model over the weekend. Major semiconductor manufacturers like Nvidia, Broadcom, Super Micro, and Arm—considered key to American and European AI efforts—were especially hard hit, with stock values sliding around 10 percent for each company.
Sustained losses by Nvidia could pose a serious concern. The GPU semiconductor manufacturer accounted for a quarter of the S&P 500 gains in 2024. Likewise, Nvidia is a major supplier of GPUs and other semiconductors for a large swath of the American technology industry, meaning losses could spread to other related companies.
However, some industry and market experts suspect the timing of the rollout of DeepSeek R1—an advanced ChatGPT-like AI model—was meant to cause the market sell-off.
DeepSeek, a Chinese AI startup, claims to have spent just $5.6 million training its R1 model, whereas U.S. and European AI projects have spent hundreds of millions and even billions of dollars. The National Pulse reported last week that Mark Zuckerberg’s Meta Platforms Inc. announced it would spend upwards of $65 billion on AI investments in 2025.
Additionally, DeepSeek claims to have used just 2,000 Nvidia chips to train its AI model instead of the tens of thousands most models require.
If the Chinese company’s claims are true, it would represent a significant breakthrough in reducing the computing power needed to train and run an AI model. Skeptics contend that DeepSeek’s claims may be meant to damage competing AI companies, especially those in the U.S., by undermining investor confidence.
