US Tech Stocks Plunge as China's DeepSeek Launches Competitive AI Chatbot

The U.S. stock market experienced significant declines following the launch of DeepSeek, a Chinese AI chatbot that has quickly gained popularity and surpassed OpenAI's ChatGPT on the App Store. The Nasdaq Composite fell by 3.6%, marking its largest drop in five months, as investors reacted to the potential threat posed by DeepSeek's lower-cost AI technology, developed for just $5.6 million. Major tech companies, including Microsoft and Nvidia, saw substantial drops in their stock prices, raising concerns over the competitive edge of U.S. firms amidst escalating AI advancements in China. Analysts remain divided on whether the market's reaction is an overreaction or a legitimate concern over Chinese tech capabilities, with some arguing DeepSeek's success could reshape investment strategies in the U.S. AI sector. The situation underscores the ongoing U.S.-China AI rivalry, as American firms plan to invest billions to bolster their AI infrastructure in response to emerging competition. This dynamic raises questions about the effectiveness of U.S. export restrictions on technology in curtailing China's progress in the AI race.