US stocks erased over $1 trillion in market value after Chinese startup DeepSeek's AI breakthrough sparked a massive tech selloff.
Nvidia suffered the largest single-day market cap loss in history, plunging 17% and losing $589 billion in value.
DeepSeek claimed to develop an AI model matching OpenAI's capabilities for just $5.6 million, compared to the billions spent by US companies.
The Chinese startup's AI chatbot quickly became the most downloaded app on Apple's US App Store, overtaking ChatGPT.
Marc Andreessen called DeepSeek's breakthrough "AI's Sputnik moment," highlighting its potential to reshape the industry.
The development questions the necessity of massive US investments in AI infrastructure and chip technology.
Other tech giants felt the impact, with Alphabet dropping 4%, Microsoft falling 2%, and chipmaker Broadcom plunging 17%.
DeepSeek achieved its breakthrough using less advanced chips due to US export restrictions, potentially undermining America's technological edge.
The startup's success suggests US sanctions may have inadvertently pushed China to develop more efficient, cost-effective AI solutions.
Critics question DeepSeek's claims, with some speculating the company has secret access to advanced Nvidia chips despite export controls.