Hype around DeepSeek sent the stock price of several Chinese companies soaring, but proof of their ties to DeepSeek is non-existent.

The tech-heavy Nasdaq composite closed down nearly 3% on Monday, with shares of AI-focused chipmaker Nvidia plunging 17% and shaving nearly $590 billion from the company’s market cap.

Chuck Zodda, managing partner and Chief Investment Officer from the Armstrong Advisory Group discusses the dip of tech stocks, especially Nvidia after the announcement of Chinese AI start-up DeepSeek.

Entrepreneur Marc Andreessen, known for co-writing Mosaic, one of the world’s first web browsers, wrote Sunday on X that “DeepSeek R1 is AI’s Sputnik moment,” likening it to the space race between the U.S. and the Soviet Union and the event that forced the U.S. to realize that its technological abilities were not unassailable.

Yet many in Silicon Valley believe the broad sell-off is an overreaction to DeepSeek’s latest model, which they argue could spur wider adoption and utility of AI by radically lowering the technology’s cost,

U.S. tech stocks, including Nvidia, Oracle and Broadcom, plummeted Monday after Chinese startup DeepSeek said it created an AI system that can compete against chatbots such as OpenAI's ChatGPT at much lower costs.

DeepSeek released an open-source artificial intelligence model in December, saying it took only two months and less than $6 million to create it.

Tech stocks tumbled on Monday as advances by Chinese artificial intelligence start-up DeepSeek cast doubt on whether the US could sustain its leadership in AI by spending billions of dollars on chips.