The rise of China’s DeepSeek AI assistant has sent shares of Western tech companies tumbling
The world’s 500 richest people lost a total of $108 billion in wealth on Monday amid a tech-led selloff linked to the emergence of Chinese AI app DeepSeek, according to Bloomberg. The selloff erased gains from the tech portfolios of billionaires such as Nvidia co-founder Jensen Huang and Oracle’s Larry Ellison, whose fortunes are tied to AI.
DeepSeek’s AI assistant, released last week, has soared in popularity within days and overtook US-based OpenAI’s ChatGPT as the most popular program on the Apple App Store over the weekend.
The company has claimed that it created its latest AI model for a fraction of the cost of similar products by the mostly-American firms dominating the global market. The startup’s popularity sent shock waves through tech stocks on Monday, causing many of them to plunge. The NASDAQ Composite Index fell 3.1%, and the S&P 500 dropped by 1.5%.
Nvidia dropped by 17%, or roughly $600 billion, and ceded its title as the world’s most valuable company to Apple, causing Huang’s fortune to shrink by $20.1 billion, a 20% drop, according to the Bloomberg Billionaires Index. Oracle’s stock plunged around 14%, which saw Ellison lose $22.6 billion, or 12% of his fortune. Dell’s Michael Dell saw his fortune shrink by $13 billion, and Binance co-founder Changpeng Zhao lost $12.1 billion.
Some big names in the tech industry, however, escaped the sell-off unscathed. Meta founder Mark Zuckerberg’s net worth was up $4.3 billion at the end of trading on Monday. Amazon founder Jeff Bezos’ wealth jumped by around $600 million.
Analysts believe that DeepSeek’s breakthrough jeopardizes the US narrative that AI innovation needs massive capital inflows. Some note, however, that the reason DeepSeek did not rely on big investment is that Chinese firms have limited access to advanced chips due to US export controls. The company said last month that it used Nvidia’s H800 chips – which are not subject to restrictions – for training its latest AI model, and spent less than $6 million in the process, while rival US firms spend billions on similar solutions.
Commenting on the app’s success, US President Donald Trump said it should be seen as a “wake-up call” for US tech titans, prompting them to come up with more cost-effective AI models.
“The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser focused on competing to win… So instead of spending billions and billions, you’ll spend less and hopefully achieve the same results,” Trump told reporters on Monday.
