US Stocks Take Massive Hit After Release of Chinese AI

Farrukh Abadi

The US stock market lost $1 trillion in value on Monday (01/27) following the release and skyrocketing popularity of the new Chinese AI chatbot DeepSeek. The chatbot is able to perform on par with or even outperform its competition—like Microsoft and OpenAI’s ChatGPT—for considerably less money and power, calling into question the return on investments of bloated US tech monopolists who have been hit the hardest in the market.

California-based semiconductor monopoly Nvidia lost its placed as the most valued company in the world after losing nearly a fifth of its value on Monday in what was the biggest fall in US stock market history. The stocks of other tech firms fell as well, with Microsoft, a joint owner of ChatGPT, losing 2.5% in value and Alphabet, Google’s parent company, dropping over 4% in value.

DeepSeek is a project of the Chinese hedge fund High-Flyer, which relies on AI to do trading. On January 10, DeepSeek released its first free chatbot app; by January 27, it surpassed ChatGPT as the most downloaded free app on the Apple store in the US and UK, coinciding with the stock plunge that extended to European and Japanese markets as well. That same day, DeepSeek was subjected to a cyberattack and has since temporarily limited its registration for new users to China.

The plunging stocks has sent some US imperialists into a frenzy. Neal Khosla, a major investor in OpenAI, tweeted “deepseek is a ccp [Chinese Communist Party] state psyop + economic warfare to make american ai unprofitable,” accusing them of fabricating the cost of production. OpenAI’s billionaire CEO Sam Altman speculated that DeepSeek creators used ChatGPT to construct their own model, a violation of their terms of usage. However, critics have pointed out that ChatGPT was created precisely based on the accumulation of data through the infringement of the rights of other companies.

According to High-Flyer, DeepSeek only cost around $5.6 million in supplies and relied largely on around 2,000 H800 graphics processing units (GPUs), an older and less powerful chip technology since Biden-era sanctions prevented access to the latest chips in China. Meanwhile, ChatGPT and other competitors cost hundreds of millions of dollars to produce and rely on more than ten times more computing power, using 16,000 or more of the most advanced A100 chips.

The loss in profits of American tech monopolies despite having significantly more money and resources highlights the parasitic and regressive nature of monopoly capitalism, which stamps out competition and hinders innovation in the pursuit of domination of markets and profits. Sam Altman’s OpenAI, initially a publicly-funded nonprofit turned $156 billion private company, is currently fundraising for a $7 trillion dollar AI project. Recently, the Trump administration has been boasting of a $500 billion AI joint venture project called Stargate, a collaboration among various tech monopolists including OpenAI, Nvidia, and Microsoft, among others, that began under the Biden administration. This massive concentration of wealth—fueled by the superexploitation of the working classes in the Third World both by the US imperialists and Chinese social imperialists—is being gradually undercut by Chinese monopolists as the degenerating US imperialism becomes increasingly sluggish both politically and economically.

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