Tech Stocks Drop Amidst Innovative New Chatbot

The DeepSeek logo.

The S&P 500 and Nasdaq dropped sharply as the AI sector faced a shake-up. Chinese startup DeepSeek announced a lower-cost Large Language Model (LLM), a type of AI that can generate human-like text. This news hit tech shares hard, causing NVIDIA, Broadcom, and Micron Technology to tumble (in terms of stock prices). Other News: Power providers like Vistra and Constellation also saw declines. Meanwhile, AT&T saw a rise in stock value, by surpassing profit and sales estimates. Akero Therapeutics' shares soared a hundred percent on positive results from a liver disease treatment study. Investors turned to bonds, causing the 10-year treasury yield to dip.

What is DeepSeek AI?

DeepSeek AI is a Chinese startup that created another ChatGPT-like app. It can generate text, answer questions, and do pretty much anything other LLMs can do. So, what exactly separates it from the competition? Well, OpenAI cost $540 million to develop (in losses) initially. DeepSeek only cost $5.6 million, and their chatbot is just as powerful. Big tech companies (that originally kickstarted the AI boom) are estimated to spend over $200 billion this year. DeepSeek claims to have built just as good of an LLM at a mere fraction of that price. This has impressed AI experts around the world, especially its latest version (released on January 20). DeepSeek has accomplished such an advanced level of AI with such little money by using less advanced chips. This chatbot is entirely free and can be downloaded on both iOS and Android. In one day, it has jumped to number one on the App Store, shocking the tech industry. The possibility that a company like DeepSeek could exist has dropped many AI and tech related stock prices. It has even prompted US President Donald Trump to refer to this as a "wake-up call" for US companies and that they must "compete to win." DeepSeek is another sign that the AI race is now global, and China's efforts to double down on shifting to more modern technology are working. American companies have a lot to learn from this.