Tech stocks plunged Monday morning, as fears mounted that Chinese artificial intelligence firm DeepSeek leapfrogged U.S. dominance in AI development.
The Nasdaq Composite, which tracks the country’s largest tech firms, plunged more than 3%. The Dow fell less than points and the S&P 500 tumbled almost 2%.
The sell-off was sparked by advances claimed by China’s DeepSeek, which released an open-source artificial intelligence model in December, after saying that it took only two months and less than $6 million to create. Those claims would be far less than the hundreds of billions of dollars that American tech giants such as OpenAI, Microsoft, Meta and others have poured into developing their own models, fueling fears that China may be passing the U.S. in the scale and efficiency of their AI investments.
DeepSeek’s app is now the top free app in the Apple App Store, pushing OpenAI’s ChatGPT into second place.