US tech stocks stabilized on Tuesday after a major drop on Monday, triggered by the rapid rise of China’s new AI app, DeepSeek. According to the BBC, the app claimed it could match the performance of leading AI models at a fraction of the cost, shaking confidence in America’s dominance in AI technology.

Nvidia, a US chipmaker heavily invested in AI, suffered a sharp 17% drop on Monday, losing about $600 billion in value.

However, BBC reports that its shares recovered by over 6% by Tuesday, as experts suggested Monday’s sell-off may have been an overreaction.

DeepSeek, launched just a week ago, has already become the most downloaded free app in the US. The BBC highlights that its technology uses far fewer chips than its competitors, significantly lowering costs, which could reshape the AI industry. Analysts are questioning whether the US can maintain its lead in AI and how this might influence future investments.

President Donald Trump called the development “a wake-up call” for the US but added it could be beneficial in the long term. The BBC quoted him saying, “If we can do it cheaper and better, that’s good for us.” Despite concerns, Trump expressed confidence that the US will remain a leader in AI.

DeepSeek’s emergence has fueled debates about cybersecurity, data privacy, and competition in AI. Australia’s science minister, Ed Husic, cautioned that important questions about data management and consumer safety still need answers, according to the BBC.

The BBC also notes that some experts, like OpenAI’s CEO Sam Altman, praised DeepSeek’s innovation but doubted its ability to fully compete with leading US models in the future. Elon Musk also questioned DeepSeek’s claims, suggesting the app might rely on banned Nvidia chips.

While US tech markets have steadied, the impact of DeepSeek’s low-cost AI could push more companies to adopt the technology, potentially expanding the market faster.

The BBC emphasizes that this moment challenges America’s AI dominance and has global implications for the future of tech innovation.

Credit : BBC

https://www.bbc.com/news/articles/c4gpq01rvd4o

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