The year 2024 marked a golden era for Western tech giants like Nvidia, Google and Meta, as AI innovations propelled their stocks and solidified the US’s dominance in the global AI race. With breakthroughs like ChatGPT, Gemini and Grok, the US seemed untouchable. However, 2025 delivered a seismic shock when DeepSeek, a Chinese AI startup, upended this narrative. By offering low-cost, high-efficiency AI models, DeepSeek has not only challenged ChatGPT’s supremacy but also triggered a financial tremor across US tech markets, notably cratering Nvidia’s stock by 16.92% in a single day—a record $593 billion loss. Here’s why DeepSeek has caused such chaos.
Top Reasons Why DeepSeek Has Caused Mayhem in the West
1. Cost Efficiency Disrupts the Market
DeepSeek’s meteoric rise hinges on its ability to deliver AI solutions at a fraction of the cost. While ChatGPT and other US models rely on massive datasets and expensive infrastructure, DeepSeek-R1 operates with startling efficiency. Requiring just 2,000 Nvidia H800 chips—far fewer than competitors—the Chinese model is 20 to 50 times cheaper than OpenAI’s offerings. This pricing edge has translated into rapid adoption: DeepSeek’s app recently overtook ChatGPT in downloads on Apple’s App Store, signaling a shift in user preference toward affordability without sacrificing performance.
2. Semiconductor Sector Shakeup
DeepSeek’s lean hardware needs sent shockwaves through the West’s semiconductor industry, where Nvidia had been a linchpin. The company’s 16.92% stock crash—erasing $593 billion in hours—reflects fears that demand for high-end GPUs could plummet if AI firms prioritise efficiency over power.
3. Open-Source Innovation vs. Proprietary Models
Unlike US giants guarding proprietary systems, DeepSeek leverages open-source frameworks to reduce costs and accelerate development. This approach democratises access to advanced AI tools, undercutting the premium pricing of ChatGPT and Gemini.
4. Shifting Global AI Power Dynamics
DeepSeek’s success isn’t just a corporate milestone—it’s a geopolitical pivot. The US had banked on AI to fuel economic growth, with tech contributing heavily to its 2024 GDP. However, DeepSeek’s rise exposes cracks in this dominance.
5. Bypassing US Export Restrictions?
Another factor fueling DeepSeek’s rise is its ability to function with minimal high-end hardware. Given that US restrictions aim to limit China’s AI advancements by controlling chip exports, DeepSeek’s efficient model questions the effectiveness of these restrictions. If DeepSeek can continue innovating with fewer resources, it may weaken US efforts to curb China’s AI progress.
DeepSeek's rapid success has sent shockwaves across the US AI industry. With its cost-effective approach and growing user base, it is directly challenging the dominance of AI giants like OpenAI and Nvidia. As the West scrambles to respond, one thing is clear—DeepSeek has reshaped the AI battlefield and the implications for the global AI market are just beginning to unfold.