US stocks dropped sharply Monday morning after a surprise advancement from a Chinese artificial intelligence company, DeepSeek, threatened the aura of invincibility surrounding America’s technology industry.
DeepSeek, a one-year-old startup, revealed a stunning capability: It presented a ChatGPT-like AI model called R1, which has all the familiar abilities, operating at a fraction of the cost of OpenAI’s, Google’s or Meta’s popular AI models. The company said it had spent just $5.6 million training its newest AI model, compared with the hundreds of millions or billions of dollars US companies spend on their AI technologies. The Wall Street Journal first reported the ultra-low cost.
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That sent shockwaves through markets, in particular the tech sector, on Monday.
The Dow opened about 369 points, or 0.8%, lower. The S&P 500 fell by 2% and the tech-heavy Nasdaq plunged by 3.6%. The Nasdaq hasn’t closed 4% lower since September 2022.
Meta last week said …