Chinese AI startup DeepSeek’s latest model triggered a $1 trillion sell-off in US and European tech stocks, as investors reevaluated the inflated valuations of major American companies.

DeepSeek’s new AI model surged to the top of the Apple App Store over the weekend, challenging more expensive models like OpenAI’s. This raised concerns about the billions being invested by tech giants such as Microsoft, Meta, and Alphabet in AI development.

The launch also cast a spotlight on Nvidia Corp., the leading AI chipmaker, whose stock has skyrocketed ninefold over the past two years, making it the world’s most valuable company. However, Nvidia saw a sharp drop of over 10% in premarket trading on Monday, potentially wiping out around $340 billion in market value if the decline holds throughout the session.

About DeepSeek

DeepSeek, the newly introduced AI model, is rapidly gaining attention as a formidable challenger to established models from OpenAI and Meta Platforms Inc. Its key strengths lie in its cost-efficiency and ability to function on less powerful hardware.

Developed with an investment of just $5.6 million, the DeepSeek-V3 model is a fraction of the cost typically associated with AI models from major US tech giants. According to Reuters, this open-source model has swiftly climbed to the top of Apple’s App Store rankings, showcasing its growing popularity.