DeepSeek AI Triggers $1T Loss in US Crypto, Tech Markets

DeepSeek’s low-cost AI models disrupt U.S. tech, causing market volatility.
Major AI stocks drop, losing over $1 trillion in market cap amid DeepSeek’s rise.
Experts see current AI dip as a buy opportunity, highlighting DeepSeek’s scalable models.

AI-related digital assets took a hit, thanks to the impact caused by DeepSeek, a Chinese AI startup. Known for developing AI models at a fraction of the cost spent by Silicon Valley giants, DeepSeek’s rise in the market has caused volatility across tech stocks and the AI market.

The market reacted quickly as major AI tokens, including companies, declined. The affected companies include Arm ($ARM), Nvidia ($NVDA), Broadcom ($AVGO), Super Micro ($SMCI), and others, all losing between 2% and 5.5% in value.

Chip Stocks Overnight Reaction to DeepSeek:
1. Arm, $ARM: -5.5%
2. Nvidia, $NVDA: -5.3%
3. Broadcom, $AVGO: -4.9%
4. Super Micro, $SMCI: -4.6%
5. Taiwan Semi, $TSM: -4.5%
6. Micron, $MU: -4.3%
7. Qualcomm, $QCOM: -2.8%
8. AMD, $AMD: -2.5%
9. Intel, $INTC: -2.0%
US markets are…
— The Kobeissi Letter (@KobeissiLetter) January 27, 2025

The Nasdaq 100 futures fell by more than 2%, losing over 470 points, wiping out over $1 trillion from the U.S. stock market’s market capitalization.

Related: RWAI Combines AI and Tokenization for Smarter Asset Launches

The DeepSeek Phenomenon: Low-Cost AI Models Challenge U.S. Dominance

DeepSeek has grabbed attention for its AI models built on inexpensive infrastructure and powered by chips that cost a small fraction compared to the ones used by leading U.S. companies like Nvidia

The company’s AI Assistant, driven by the DeepSeek-V3 model, has surpassed OpenAI’s ChatGPT to become the top-rated free app on the Apple App Store in the U.S. The rise of DeepSeek’s app, released on January 10, points to the growing influence of the Chinese startup in the AI sector.

Researchers behind DeepSeek’s model claim it outperforms other open-source models and rivals the capabilities of advanced closed-source models. Despite the Biden administration’s export restrictions on advanced chips to China, DeepSeek has worked with Nvidia’s H800 chips, spending less than $6 million on training its model.

Related: Top 10 AI Crypto Coins to Watch in 2025: Insights & Trends

AI Sector’s Reaction: A Buy-the-Dip Opportunity?

Despite the market correction, analysts within the decentralized finance artificial intelligence (DeFAI) space suggest that the current dip in AI coins is an opportunity for investors to buy at lower prices. Industry expert Daniele pointed out that DeepSeek’s open-source models could help scale AI applications to millions of users by reducing entry costs.

If you’re selling AI coins due to @deepseek_ai models being cheap and open source, they are actually very helpful to scale AI Apps to Millions of users with low-entry barrier pricing. Is the best thing that could have happened to the industry.
— Daniele (@danielesesta) January 26, 2025

Although U.S. companies face challenges from DeepSeek’s low-cost approach, the broader AI industry could benefit from a shift toward more accessible and scalable AI solutions.

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Source: https://coinedition.com/chinas-deepseek-ai-wipes-out-1-trillion-from-us-crypto-and-tech-markets/