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The Conversation
The Conversation
Michael J. Davern, Professor of Accounting & Business Information Systems, The University of Melbourne

DeepSeek shatters beliefs about the cost of AI, leaving US tech giants reeling

DeepSeek United States Nvidia Artificial Intelligence Chinese Communist Party

Almost A$1 trillion (US$600 billion) was wiped off the value of artificial intelligence microchip maker Nvidia overnight on Monday, when a little-known Chinese startup, DeepSeek, threatened to upend the US tech market.

While Nvidia suffered the biggest one-day loss in sharemarket history, other tech giants – Microsoft, Alphabet and Amazon, who are investing heavily in competing AI tools including ChatGPT and Gemini – were also hit.

The rout was caused by investors’ shock at the claimed performance of DeepSeek’s new R1 chatbot. The Chinese AI was reported to be more advanced than its competitors and less expensive to develop.

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