Shares of Nvidia rose in Europe on Wednesday, signalling a potential recovery after a sharp decline earlier in the week. The company, a key player in the AI sector, saw its Frankfurt-listed shares increase by 2%, following an 8.9% gain on Wall Street the previous day. This bounce came after a steep drop in Nvidia’s market value on Monday, triggered by the emergence of China’s DeepSeek AI tool, which posed a challenge to established players like OpenAI’s ChatGPT.
The decline in Nvidia’s stock earlier in the week saw the company lose nearly $600 billion in market value, marking the largest single-day loss in history for any company. However, markets showed signs of stabilising on Wednesday, bolstered by a surge in shares of ASML, the Dutch company that manufactures tools for chip production. ASML’s 11% jump helped lift European tech stocks, with chipmakers BE Semiconductor and ASM International also posting solid gains.
Investors seemed to regain confidence, with some believing that DeepSeek’s advancements might not disrupt the broader AI market. According to market strategist Chris Weston, the innovation from DeepSeek could even generate new demand for Nvidia’s GPUs, which are critical for AI applications. Meanwhile, Microsoft and OpenAI are investigating whether DeepSeek improperly used data from ChatGPT’s technology.
As markets remain volatile, investors are now looking ahead to earnings reports from major tech giants like Nvidia, Apple, and Microsoft, which could provide more clarity on the sector’s outlook. Despite ongoing uncertainties, the overall sentiment in the tech sector appeared more positive by midweek.
Alibaba launched a new version of its Qwen 2.5 AI model on Wednesday, claiming it outperforms competitors like DeepSeek-V3, GPT-4, and Llama-3.1-405B. The release, timed on the first day of the Lunar New Year when most Chinese workers are on holiday, highlights the growing pressure from DeepSeek’s rapid rise in the AI sector. The Chinese tech giant’s announcement emphasised that Qwen 2.5-Max delivers better performance across various AI benchmarks compared to some of the top models from OpenAI and Meta.
DeepSeek’s recent success, particularly after its January releases of the DeepSeek-V3 and R1 models, has shaken the AI market, including both international competitors and Chinese firms. The company’s low development and usage costs have raised concerns about the sustainability of large AI investments from US tech giants. The competition within China has intensified, with Alibaba’s Qwen 2.5-Max release and ByteDance’s update to its AI model shortly after DeepSeek’s R1 release, signalling a rapid response to the new market dynamics.
DeepSeek’s previous model, V2, had already disrupted the market last year, triggering a price war with Chinese firms slashing prices on AI models. Alibaba and other major tech companies, including Baidu and Tencent, had to follow suit, offering significantly cheaper options. Despite this, DeepSeek’s founder, Liang Wenfeng, has expressed that his company is focused on achieving Artificial General Intelligence (AGI) rather than competing on price, contrasting DeepSeek’s agile, research-driven approach with the more structured and costly operations of larger tech firms.
As the battle for AI supremacy intensifies, the emergence of DeepSeek, with its lean team of researchers, continues to challenge China’s tech giants, who may find themselves under pressure to innovate faster and more efficiently to keep up with the rapidly evolving AI landscape.
OpenAI has raised concerns about Chinese companies attempting to access US AI technologies to enhance their models. In a statement released on Tuesday, OpenAI highlighted the critical need to protect its intellectual property and the most advanced capabilities in its AI systems. The company emphasised that it has put in place countermeasures to safeguard its innovations and is working closely with the US government to protect the technology from being exploited by competitors and adversaries.
These comments come in response to the White House’s ongoing review of national security risks posed by Chinese AI companies, particularly the rapidly growing startup DeepSeek. The US government has been looking into potential threats as China increasingly seeks to advance its AI capabilities. David Sacks, the White House’s AI and crypto czar, explained that Chinese firms are using an AI technique called “distillation,” which allows them to extract knowledge from leading US AI models, further raising concerns about intellectual property theft.
OpenAI’s statement underscores the challenges and security risks that arise as AI becomes a critical technology with broad applications, from national defence to economic competitiveness. The company’s efforts to protect its proprietary AI models are part of a broader push by the US to ensure that its technological edge is not compromised by foreign competitors who might attempt to bypass intellectual property protections. The situation highlights the increasing geopolitical tension surrounding AI development, especially as China continues to make significant strides in the field.
Liang Wenfeng, the 39-year-old founder of DeepSeek, has rapidly become a central figure in China’s AI ambitions. Previously maintaining a low profile, he gained national attention after being invited to a closed-door symposium with Premier Li Qiang. His company has made waves by developing an open-source AI model that rivals the capabilities of industry leaders while operating at a fraction of the cost.
Unlike many Chinese tech firms that focus on commercial applications, DeepSeek has prioritised fundamental AI research. Liang argues that China must shift from imitation to original innovation to bridge the gap with the United States. His decision to open-source DeepSeek’s models aligns with his belief that collaboration and transparency will accelerate AI development, much like Silicon Valley’s early approach.
Liang’s background in finance and engineering has shaped his strategic vision. After co-founding a successful quantitative hedge fund, he pivoted to AI, founding DeepSeek in 2023. His leadership has attracted top talent from China’s elite universities, drawn by the challenge of developing artificial general intelligence. As DeepSeek gains global recognition, it signals China’s intent to play a leading role in the future of AI.
Italy’s data protection authority, the Garante, has ordered the Chinese AI startup DeepSeek to block its chatbot in the country, citing insufficient responses to queries about its privacy policy. The watchdog had requested detailed information on data collection practices, sources, purposes, and storage, particularly concerning whether user data is stored in China. DeepSeek’s failure to adequately address these concerns prompted the Garante to impose an immediate ban and launch an investigation.
DeepSeek had removed its AI assistant from Italian app stores earlier this week but claimed it was not subject to local regulation. Agostino Ghiglia, a member of the Garante’s board, stated that the company’s stance worsened its position. Italian users who had already downloaded the app still reported access to the chatbot, while the web version remains operational. The Garante emphasised that European citizens must have clear consent and data protection guarantees, especially regarding servers located in China.
The Garante’s action highlights growing scrutiny of AI platforms in Europe, with data regulators in Ireland and France also questioning DeepSeek’s privacy practices. Italy‘s proactive approach has drawn attention; the country temporarily banned ChatGPT in 2023 over similar concerns. DeepSeek has positioned its AI as a cost-effective alternative to US models, surpassing ChatGPT as the top-rated app on Apple’s US App Store. However, its refusal to cooperate with European regulators may jeopardise its expansion.
Chinese AI startup DeepSeek has announced that its Janus-Pro-7B model has surpassed competitors, including OpenAI’s DALL-E 3 and Stability AI’s Stable Diffusion, in benchmark rankings for text-to-image generation. This achievement solidifies DeepSeek’s reputation as a key player in the rapidly evolving AI market.
According to a technical report, the Janus-Pro model builds upon its predecessor by incorporating enhanced training processes, higher-quality data, and advanced scaling, resulting in improved stability and more detailed image outputs. The company credited the inclusion of 72 million high-quality synthetic images, combined with real-world data, for the model’s superior performance.
This success follows the launch of DeepSeek’s new AI assistant based on the DeepSeek-V3 model, which has become the top-rated free app in the US Apple App Store. The news sent shockwaves through the tech industry, leading to declines in shares of companies like Nvidia and Oracle, as investors reassessed the competitive dynamics in AI development.
OpenAI and Stability AI have yet to comment on the claims. DeepSeek’s achievements highlight the growing influence of Chinese firms in cutting-edge AI innovation, setting the stage for heightened competition in the global tech market.
The launch of DeepSeek’s cost-efficient AI model has sent shockwaves through Australian tech markets, with shares in AI-related companies experiencing steep declines. Investors are increasingly worried that the Chinese startup’s affordable technology could undermine the dominance of established players in the sector.
Among the biggest losers were AI software firm Appen, which saw its stock drop by 3.3%, and chipmaker Brainchip, which lost 10.3%. The technology sub-index fell by 1%, with major data centre operators also taking a hit. Analysts expressed concerns that DeepSeek’s success might reduce demand for AI infrastructure, which had driven heavy investments in Australian data centres.
DeepSeek’s AI assistant, launched last week, has already outpaced US competitor ChatGPT in downloads on Apple’s App Store. This rapid rise has sent ripples through the global tech sector, contributing to Nvidia’s record $592.7 billion market loss.
As Australian investors reassess their exposure to AI stocks, market strategists predict a shift towards safer sectors such as healthcare and consumer staples, after DeepSeek’s disruptive impact.
US officials are evaluating the potential national security risks posed by the Chinese AI app DeepSeek. White House press secretary Karoline Leavitt confirmed the National Security Council is leading the review, highlighting concerns about American AI dominance. White House AI and crypto adviser David Sacks suggested intellectual property theft might have played a role in DeepSeek’s development.
Global technology stocks faced a sell-off over fears that DeepSeek’s low-cost AI model could challenge major US firms like OpenAI and Google. Sacks explained that DeepSeek may have used a technique called distillation, allowing one AI model to learn from another. He warned that American AI companies would likely implement measures to block such practices.
Donald Trump argued that DeepSeek’s rise should push US firms to intensify their AI efforts. While acknowledging China’s progress, he maintained that American companies remain leaders in innovation. He suggested that more affordable AI solutions could benefit the industry without sacrificing technological advances.
Washington continues to restrict AI chip exports to China, aiming to slow its technological advancements. The Commerce Department, under Trump’s nominee Howard Lutnick, is set to play a key role in enforcing these limitations.
Chinese AI startup DeepSeek has shaken the global AI industry with its low-cost, high-performance models, sparking mixed reactions among leading US developers. Its flagship AI assistant recently surpassed OpenAI’s ChatGPT as the most downloaded app on Apple’s US App Store. DeepSeek achieved this using Nvidia’s H800 chips, training its model for under $6 million—an astonishing contrast to the billions spent annually by US tech giants.
While some American AI experts acknowledged DeepSeek’s achievements, many remain unconvinced. OpenAI’s CEO, Sam Altman, praised the R1 model for its cost-effectiveness, but analysts noted that the $6 million figure only reflects the final training phase, with total development costs likely exceeding $1 billion. Nvidia viewed DeepSeek’s success as evidence of growing demand for its AI chips, despite US export controls aimed at slowing China’s progress.
US-based firms like Snowflake have already added DeepSeek models to their AI offerings, citing overwhelming customer interest. However, concerns about China‘s involvement in AI technology persist. DeepSeek’s decision to release its models as open source has drawn applause from industry leaders, highlighting a shift toward more accessible AI development.
With China’s advancements narrowing the gap in AI innovation, competition between US and Chinese firms intensifies. DeepSeek’s rapid rise is forcing industry players to rethink their strategies, while questions about scalability and long-term sustainability remain unanswered.
US President Donald Trump revealed on Monday that Microsoft is in discussions to acquire TikTok, expressing a desire for a bidding war over the popular app. While Microsoft declined to comment, TikTok and its Chinese parent company, ByteDance, did not immediately respond to media inquiries. TikTok, which has around 170 million US users, faced a brief shutdown just before a law that could force ByteDance to sell the app or face a ban took effect in January.
Trump mentioned last week that he was in talks with various parties regarding TikTok’s future, promising a decision within 30 days. The president also indicated that he would be open to Elon Musk acquiring TikTok, although the Tesla CEO has yet to comment. In addition to Microsoft, AI startup Perplexity AI proposed merging with TikTok, suggesting a potential deal where the US government could hold up to half of the new company.
This marks the second time Microsoft has been involved in potential talks to acquire TikTok. Back in 2020, Microsoft emerged as a frontrunner in buying the app, but those discussions eventually collapsed. Microsoft CEO Satya Nadella later described the situation as “the strangest thing” he had ever worked on, noting how the deal abruptly disappeared after the Trump administration pushed for a divestment.
