The Chinese chatbot DeepSeek is causing a stir in the market and challenging American AI dominance.

The Chinese company DeepSeek has introduced the free chatbot DeepSeek-R1, which has become the most popular app in the Apple App Store in the USA, the UK, and China. The new AI assistant not only surpassed the American ChatGPT in several reasoning ability tests but also caused panic among investors in Silicon Valley.

DeepSeek-R1 is built on the open-source DeepSeek-V3 model. According to the company, its development cost less than $6 million, significantly cheaper than similar solutions from competitors that invest billions of dollars in technology. Moreover, the application utilizes less powerful chips and a smaller volume of data, casting doubt on the common belief regarding the technological superiority of the USA in the field of artificial intelligence.

The success of the new chatbot has resonated in the stock markets. On Monday, European Nasdaq 100 futures fell by 2.6%, while the S&P 500 dropped by 1.4%. Shares of Nvidia, a leading chip manufacturer, plummeted by nearly 10%, and SoftBank Group, which specializes in AI investments, recorded its largest single-day decline since September, losing over 8%.

DeepSeek, founded by Chinese billionaire Liang Wenfen, is exclusively funded by the High-Flyer investment fund. The company has stated that it does not plan to seek external funding, focusing instead on developing core technologies rather than commercial applications. All DeepSeek models will remain publicly accessible.

However, the launch of DeepSeek-R1 has sparked debates among AI developers in Silicon Valley. Experts are discussing whether the Chinese company can disrupt the dominance of American giants such as OpenAI, Google DeepMind, Meta, and Anthropic.

Some analysts express doubts about DeepSeek's long-term prospects. Singaporean consultant Wei-Sern Ling noted that the Chinese chatbot might weaken investment interest across the entire AI supply chain. At the same time, Citi warned that Chinese companies still face significant challenges that could limit their market impact.

American companies remain leaders in developing reasoning models—a field aiming to bring AI's cognitive abilities closer to those of humans. However, DeepSeek's success indicates that global competition in this area continues to intensify.