Chinese AI DeepSeek sparks panic through global stock markets

The emergence of a new artificial intelligence (AI) development from Chinese company DeepSeek has triggered a massive sell-off of Japanese technology company stocks.

Report informs via Reuters that the introduction of a cheaper Chinese alternative to Western competitors has cast doubt on the positions of all leading global companies in this field.

The agency notes that Japanese companies have been in the spotlight, as markets in South Korea, Taiwan, and China are closed for the next few days due to the celebration of the Lunar New Year. The launch and rapidly growing popularity of DeepSeek have prompted investors to dump shares of technology companies worldwide.

Shares of Nvidia, one of the largest American technology companies and a developer of graphics processors and chips that has played a leading role in the development of AI technologies, fell by 17%, with losses amounting to $593 billion. According to Bloomberg, the world's 500 richest people lost a total of $108 billion on Monday due to the tech sector crash.

Billionaires whose fortunes are tied to artificial intelligence suffered the greatest losses: Nvidia co-founder Jensen Huang's fortune shrank by $20.1 billion (20%), while Oracle Corp. co-founder Larry Ellison's losses of $22.6 billion were larger in absolute terms but amounted to only 12% of his fortune, according to the Bloomberg Billionaires Index. Michael Dell of Dell Inc. lost $13 billion, and Binance Holdings co-founder Changpeng Zhao (CZ) lost $12.1 billion.

OpenAI CEO Sam Altman, whose American research organization is considered a leader in AI development, called the Chinese DeepSeek an "impressive model." "Obviously, we will be creating much more advanced models, and the emergence of a new competitor can only be welcomed," Reuters quotes him as saying.

The agency reports that although little is known about the Hangzhou-based Chinese company, it used less powerful Nvidia chips to train its AI, and spent only $6 million on its creation. This has presumably undermined investor confidence, as chip power was considered a crucial component for AI training.