Global tech stocks experienced significant declines on Monday, triggered by the unexpected launch of a new AI model by Chinese startup DeepSeek, which has raised concerns among investors. In the United States, Nasdaq 100 futures dropped by 3.3%, and chip industry leader Nvidia saw a more than 13% decrease before the market opened. Similarly, Dutch chipmaker ASML fell over 10% during morning trading in Amsterdam. In Asia, AI investor SoftBank dropped more than 8%, and Tokyo Electron slipped by 4.9%. Japanese chip companies Disco Corp and Advantest, a key supplier to Nvidia, also saw declines of 1.8% and 8.6%, respectively.

The downturn in stock prices follows DeepSeek’s unveiling of its new flagship AI model, R1, which demonstrates a new level of “reasoning.” Released in a paper last Monday, DeepSeek’s model is nearly on par with OpenAI’s offerings in terms of capability but at a significantly lower cost. This development has sparked fears among investors, politicians, and developers about the United States’ ability to maintain its lead in the AI race.

Since its launch, the DeepSeek app has reached the top spot on the Apple App Store’s Top Free Apps Chart. Russ Mould, an AJ Bell investment director, commented on the situation, stating, “The AI super-race is seeing new challengers emerge, and not everyone is going to win. The companies that enjoyed first-mover advantage will now be under pressure to launch something even better or be left behind.” These market movements suggest that investors are concerned about the potential disruption to the previously smooth performance of stocks linked to the AI theme.