The Chinese AI service has Wall Street worried that it will be cheaper than expected to develop models. But as chip stocks sink, some analysts see a silver lining.

KEY TAKEAWAYS A slew of stocks, including chip maker Nvidia, tumbled Monday after Chinese startup DeepSeek released an AI model that runs on less-advanced chips and at a lower cost than those of U.S.

The Nasdaq could face market-cap losses of nearly $1 trillion if premarket declines hold into the close of trading.

A frenzy over an artificial intelligence chatbot made by Chinese tech startup DeepSeek was upending stock markets Monday and fueling debates over the economic and geopolitical competition between the U.

Some AI researchers hailed DeepSeek’s R1 as a breakthrough on the same level as DeepMind’s AlphaZero, a 2017 model that became superhuman at the board games Chess and Go by purely playing against itself and improving, rather than observing any human games.

The S&P 500 fell 1.9% Monday. Big Tech stocks took some of the heaviest losses, with Nvidia down 17.6%, and they dragged the Nasdaq composite down 3.3%.