US tech stocks in turmoil after Chinese firm unveils AI chatbot

DeepSeek's emergence as rival to OpenAI seen as 'Sputnik moment'

- Dan Milmo, Amy Hawkins and Robert Booth

The race for domination in artificial intelligence was blown wide open yesterday after the launch of a Chinese chatbot wiped $1tn from the leading US tech index in what one investor called a "Sputnik moment", for the world's AI superpowers.

Investors punished global tech stocks after the emergence of DeepSeek, a competitor to OpenAI and its ChatGPT tool, shook faith in the US artificial intelligence boom by appearing to deliver the same performance with fewer resources.

The tech-heavy Nasdaq composite index fell 3.5% in afternoon trading in New York, representing a loss of about $1tn (£800bn) from its closing value of $32.5tn last week, as investors digested the implications of the latest AI model developed by DeepSeek.

Nvidia, a leading maker of the computer chips that power AI models, was overtaken by Apple as the most valuable listed company in the US after its shares fell 17%, wiping nearly $600bn off its market value. Google and Microsoft each shed around $90bn.

Nvidia's fall was the biggest in US stock market history, according to Bloomberg.

The DeepSeek AI assistant topped the Apple app store in the US and UK over the weekend, above OpenAI's ChatGPT.

DeepSeek claims to have used fewer chips than its rivals to develop its models, making them cheaper to produce and raising questions over a multibillion-dollar AI spending spree by US companies that has boosted markets in recent years.