A new AI model released by Chinese startup DeepSeek has caused a great flurry of buzz and consternation in the American tech world, and that was reflected in a bunch of Silicon Valley companies' stock prices Monday morning.

DeepSeek R1, which will probably get banned by Congress but it will take them 'til 2028 to do it, was released late last week for download in the Apple and Google app stores, and it's already drawing comparisons to models created by OpenAI and Google. The cause for the greatest worry among tech leaders, though, is that it cost Chinese startup DeepSeek only $5.6 million to train, as the Wall Street Journal reported — compared to the billions being spent by OpenAI, Google, Meta and others to build their AIs.

Tech stocks took a beating Monday after this revelation about DeepSeek R1, and the fact that Deepseek built it using limited-capability NVIDIA chips — which are the only ones NVIDIA has been allowed to sell to China. As CNN reports, the S&P 500 fell by 1.4% so far today, and the Nasdaq fell by 2.3%. NVIDIA's stock price was particularly hammered, falling by almost 25 points or 17% so far today.

Investor Marc Andreessen fed the fire with a Friday tweet saying, "Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen," and, he added, "as open source, a profound gift to the world."

As The Hill and others are noting, US AI infrastructure is still far superior to China's, so investors should not be so skittish.

"While the [R1] model is impressive and it will have a ripple impact, the reality is that Mag 7 and US tech is focused on the AGI endgame with all the infrastructure and ecosystem that China and especially DeepSeek cannot come close to in our view," analysts with Wedbush wrote Monday.

"The bottom line is the US outperformance has been driven by tech and the lead that US companies have in AI,” says Keith Lerner, an analyst with Truist, per CNN. "The DeepSeek model rollout is leading investors to question the lead that US companies have and how much is being spent and whether that spending will lead to profits (or overspending)."

The stock panic also impacted the energy sector, as CNN notes, because of its link to the future growth of AI.

But all of this may just a momentary panic — albeit one that is likely to help undervalued Chinese AI companies.

And the backlash has been swift, with DeepSeek saying Monday that it was hit with a "large-scale malicious cyber attack," causing them to limit new registrations.

"Time will tell if the DeepSeek threat is real — the race is on as to what technology works and how the big Western players will respond and evolve,” says Michael Block, market strategist at Third Seven Capital, per CNN. "Markets had gotten too complacent on the beginning of the Trump 2.0 era and may have been looking for an excuse to pull back — and they got a great one here."

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