Stocks in major US technology firms have fallen sharply in value after the sudden emergence of a low-cost chatbot built by a Chinese artificial intelligence (AI) firm DeepSeek.
The DeepSeek app, which was launched last week, has overtaken rivals including ChatGPT to become the most downloaded free app in the United States, BBC reported.
Shares in chip giant Nvidia fell 10 percent while Microsoft and Meta were also lower in early trading in the US on Monday.
DeepSeek chatbot was reportedly developed for a fraction of the cost of its rivals, raising questions about the future of America's AI dominance and the scale of investments US firms are planning.
It is powered by the open source DeepSeek-V3 model, which its researchers claim was developed for less than $6m (£7.5m) - significantly less than the billions spent by rivals.
However, this claim has been disputed by others in the AI space.
Researchers said they use already existing technology, as well as open source code - software that can be used, modified or distributed by anybody free of charge.
DeepSeek's emergence comes as the US is restricting the sale of the advanced chip technology that powers AI to China.
To continue their work without steady supplies of imported advanced chips, Chinese AI developers have shared their work with each other and experimented with new approaches to the technology.
This has resulted in AI models that require far less computing power than before. It also means that they cost a lot less than previously thought possible, which has the potential to upend the industry.
After DeepSeek-R1 was launched earlier this month, the company boasted of "performance on par with" one of ChatGPT maker OpenAI's latest models - when used for tasks such as maths, coding and natural language reasoning.
Silicon Valley venture capitalist and Donald Trump advisor Marc Andreessen described DeepSeek-R1 as "AI's Sputnik moment", a reference to the satellite launched by the Soviet Union in 1957.
At the time, the US was considered to have been caught off-guard by their rival's technological achievement.
DeepSeek was founded in 2023 by Liang Wenfeng in Hangzhou, a city in southeastern China.
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