DeepSeek’s Effect on Global Markets
by Daniela Cazares
Abstract
DeepSeek, a Chinese generative AI model, is quickly disrupting global markets by offering a cost-efficient alternative to American-made AI platforms. Unlike AI systems such as ChatGPT, Gemini, and Meta, DeepSeek uses fewer graphic processing units (GPUs), reducing production costs and threatening existing AI chip manufacturers.
Nvidia, a major chip producer in the United States, saw a market loss of nearly $600 billion when DeepSeek became available on Apple's App Store. If DeepSeek continues its rapid growth, it could significantly impact Nvidia and other chip manufacturers, as well as AI companies globally.
DeepSeek’s rising popularity is also raising concerns about data privacy and international security in the United States. Given China's strict regulations on corporations, there are growing fears that DeepSeek could share American user data with the Chinese government. Similar to TikTok, the United States is investigating whether DeepSeek should be banned to protect domestic AI interests and data privacy.
What is DeepSeek?
Artificial intelligence is rapidly transforming industries, careers, and financial markets. Most recently, DeepSeek—a new Chinese generative AI model—has emerged as a major competitor in the AI landscape following its January 20th release.
DeepSeek remains privately owned but has quickly gained traction, rivaling platforms like ChatGPT, Claude, and Gemini. One of its biggest advantages is its low development cost—DeepSeek was built for a fraction of what it costs to create competing AI models.
By utilizing fewer GPUs than other AI platforms, DeepSeek offers a cheaper and more efficient solution, attracting significant attention from users worldwide.
How is DeepSeek Hurting Nvidia and Other AI Companies?
DeepSeek’s rise is disrupting both AI platforms and one of the largest GPU suppliers in the world—Nvidia. Nvidia dominates the AI chip market, providing essential hardware for companies like Meta, OpenAI, Tesla, and Apple.
However, DeepSeek has found a more affordable method to develop high-performing AI, requiring an investment of just $6 million. This development has weakened Nvidia's grip on the industry, causing investors to dump Nvidia stocks.
On January 27, 2025, Nvidia suffered a record-breaking $592.7 billion market loss in a single day—the largest stock plummet in history. The impact extended beyond Nvidia, dragging down Meta, Oracle, Tesla, and contributing to a $1 trillion loss on the Nasdaq.
If DeepSeek and similar low-cost AI alternatives continue to grow, Nvidia and other AI chip giants may struggle to retain market dominance. Furthermore, high-cost AI models may face increasing competition from emerging, cost-efficient alternatives.
Data Privacy Concerns Between the US and China
DeepSeek’s growing user base in the United States raises serious concerns about data privacy. The Chinese government enforces strict corporate regulations, and past concerns about data sharing with the government—as seen with TikTok—have fueled speculation that DeepSeek might engage in similar practices.
If millions of Americans switch from US-based AI companies to DeepSeek’s free model, their search history and data could be accessed and potentially sold to the Chinese government.
The United States government is actively exploring whether DeepSeek should be banned, similar to ongoing discussions regarding TikTok. If DeepSeek continues to grow at its current pace, it could face regulatory scrutiny or be forced to partner with a US-based entity to continue operations in America.
Corporate Responsibility in Artificial Intelligence
The rise of DeepSeek and other AI models poses challenges to Nvidia’s AI chip investments and highlights broader concerns about AI’s economic, environmental, and ethical implications.
Key AI concerns:
- AI platforms consume 160% more energy than traditional computing systems.
- AI content moderation relies on underpaid workers in poor conditions.
- AI expansion could destabilize existing tech markets, creating economic volatility.
Although DeepSeek remains privately held, it’s likely to go public in the future. If it does, companies like OpenAI, Nvidia, and DeepSeek itself may experience stock volatility, similar to Nvidia’s recent $600 billion loss.
The future of AI-driven markets remains uncertain, but one thing is clear: the impact of low-cost, high-efficiency AI models like DeepSeek will continue to shape the global economy in unprecedented ways.
References
- Kelly Ng, "What Is DeepSeek - and Why Is Everyone Talking About It?", BBC, January 27, 2025.
- Derek Saul, "Biggest Market Loss in History: Nvidia Stock Sheds Nearly $600 Billion as DeepSeek Shakes AI Darling", Forbes, January 27, 2025.
- Wall Street Journal, "Live Coverage: Nvidia Stock Is Down", WSJ, January 27, 2025.
- Robert Booth & Dan Milmo, "Was This the Week DeepSeek Started the Slow Unwinding of the AI Bet?", The Guardian, February 2025.
- Bo Yang, "Taking on Generative AI’s Green Energy Dilemma", Hitachi Social Innovation, August 15, 2024.