Stock market crash due to DeepSeek chatbot. What the media say
The appearance of the Chinese chatbot DeepSeek (we wrote in detail about it and its differences from ChatGPT here) triggered a stock market crash in the United States. The largest technology and energy companies lost a total of almost $1 trillion. The entire artificial intelligence (AI) industry is in for a serious reassessment, which may cause the decline to continue. How the media describe the collapse of Silicon Valley - in the Izvestia digest.
CNN: excitement around DeepSeek led to the collapse of the market in the United States
Chip maker Nvidia has lost nearly $600 billion in market value after the unexpected success of DeepSeek jeopardized the aura of invincibility surrounding the U.S. tech industry. This is the largest loss of market value the stock has ever seen in a single day. The Nasdaq tech index fell 3.1 percent on Jan. 27, while the more diverse S&P 500 index was down 1.5 percent.
CNN
Meta (recognized as extremist and banned in Russia) and Alphabet, Google's parent company, also fell sharply. Nvidia's competitors Marvell, Broadcom, Micron and TSMC also fell sharply. Oracle, Vertiv, Constellation, NuScale and other energy and data center companies collapsed. This pulled the entire stock market down, since tech stocks make up a large portion of the market
This week, a series of earnings reports from technology companies will start, so their reaction to the DeepSeek breakout could lead to wild market moves in the coming days and weeks. Investors, on the other hand, are taking a closer look at Chinese AI companies.
Reuters: Japanese companies lose value because of DeepSeek
On January 28, the collapse affected shares of Japanese technology companies. Chip test equipment maker Advantest, a supplier to Nvidia, lost 10% after falling nearly 9% a day earlier. Chip manufacturing equipment maker Tokyo Electron was down 5%. Japan's Digital Technology Minister Masaaki Taira said the arrival of DeepSeek disproved the conventional wisdom that China's AI was years behind.
Reuters
"It was said that China's generative AI might be about five years behind, but that turned out not to be true and it seems to be on a pretty good track," Taira said, adding that Japan was scrutinizing speculation that Chinese AI might be more cost-effective [than previously thought].
Markets in tech-heavy South Korea and Taiwan will be closed for the next few days due to the Lunar New Year. Mainland China's stock exchanges are closed until Feb. 4, so investors are only selling off Japanese stocks for now. Earlier, the hype around AI led to huge capital inflows into tech corporations, which are now facing a revaluation.
Bloomberg: DeepSeek challenged assumptions about the value of AI
In San Francisco, executives and employees of AI companies are urgently analyzing DeepSeek's technology. Some employees of recognized industry leader OpenAI are trying to figure out exactly how DeepSeek was able to produce such an efficient model. The company told us that OpenAI now needs to take Chinese developments very seriously.
Bloomberg
Almost overnight, DeepSeek overturned many assumptions in Silicon Valley about the economics of creating AI, as well as the best practices for developing the technology and the extent of U.S. superiority over competitors in China. For much of the past two-plus years since ChatGPT kicked off the global AI frenzy, the industry has been betting that the path to better AI depends largely on high costs for more advanced chips from companies like Nvidia and increasingly large data centers to house them.
The hype surrounding DeepSeek led to nearly $1 trillion dollars worth of crashes in U.S. and European tech stocks on Monday as investors questioned the spending plans of some of America's biggest companies. Now new questions are being raised about the feasibility of stratospheric AI budgets.
BBC News: Trump has called for a 'wake-up call' after DeepSeek emergence
US President Donald Trump has called the rise of DeepSeek a "wake-up call". However, he noted that he was not concerned about the breakthrough and that the US would remain the dominant player in AI. Trump added that recent developments in the Chinese industry could prove "positive" for the US.
BBC News
"If you could do it cheaper, if you could do it [for] less money [and] get the same end result. I think that's good for us," he told reporters aboard Air Force One.
DeepSeek's emergence comes at a time when the U.S. is restricting the sale to China of the advanced chip technology behind AI. To continue operating without a constant supply of imported advanced chips, Chinese developers shared their findings with each other and experimented with new approaches to the technology. This has led to AI models that require far less computing power than before.
Financial Times: OpenAI chief pledges to improve its own AI models
OpenAI chief executive Sam Altman said he would accelerate the release of his own products after advances by Chinese start-up DeepSeek undermined Silicon Valley's lead in the global artificial intelligence arms race.
Financial Times
On Monday evening, Altman wrote on X (ex-Twitter) that DeepSeek's model is "impressive, especially in what they can offer for that price". He added: "Obviously we will be introducing much better models, and also the fact that we have a new competitor is really encouraging!"
Before the hype surrounding DeepSeek began, Altman said investors would spend up to $500 billion to build a network of data centers to support their AI models, adding that computing resources "are more important now than ever before." OpenAI's own budget was recently estimated at $157 billion, while it cost $6 million to create DeepSeek. The success of the Chinese development has shattered the argument that huge cash flows create an undeniable advantage in technology.
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