Apple Climbs Amid Market Rout Triggered by DeepSeek’s AI Model

The US tech stock market faced a significant downturn on January 27, 2025, following the release of DeepSeek’s new AI model, which is said to rival OpenAI’s ChatGPT at a fraction of the cost. Amid widespread panic over the implications of the Chinese AI firm’s breakthrough, Apple, Meta, and Amazon were the only three stocks from the "magnificent seven" tech giants to close in the green, while other major players saw sharp losses.

Apple, Meta, and Amazon Defy Market Trends

Apple (AAPL) led the charge, rising 3.18% on the day, while Meta Platforms (META) gained 1.91%. Amazon (AMZN) narrowly avoided a decline, closing up by 0.24%. In contrast, shares of several other high-profile tech companies took a hit.

Nvidia Corp (NVDA), a key player in the semiconductor market, saw its stock plunge nearly 17%, wiping out around $600 billion in market value. This marks the largest one-day market value drop in US stock market history. Alphabet Inc (GOOG), the parent company of Google, also faced a significant loss, with shares falling 4%. Microsoft (MSFT) and Tesla (TSLA) each saw drops of 2.14% and 2.32%, respectively, according to data from TradingView.

DeepSeek’s AI Model Causes Shockwaves

The major market movements were largely driven by the release of DeepSeek’s latest AI model, R-1, which is claimed to perform tasks in mathematics, coding, and natural language reasoning on par with, or even better than, OpenAI’s ChatGPT. DeepSeek's AI model was developed at a fraction of the cost of its US competitors, with the company stating that it was built with just $6 million in funding. This stark contrast to the substantial investments being made in the US—such as the $500 billion AI infrastructure initiative announced by President Donald Trump—has raised eyebrows and sparked concerns among investors.

Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, described DeepSeek’s R-1 launch as “AI’s Sputnik moment,” referencing the 1957 Soviet satellite launch that marked the start of the space race. The comparison underscores the disruptive potential that DeepSeek’s AI model may have in the global tech landscape.

Growing Interest in DeepSeek's Open-Source Approach

Despite skepticism from some quarters, including concerns over the accuracy of DeepSeek’s $6 million funding figure, the AI community has largely praised the company for adopting an open-source model. At a time when many major AI chatbots are closed-source, DeepSeek's approach could democratize access to advanced AI tools and potentially reshape the industry.

Several AI platforms, including Venice AI—founded by Erik Voorhees—have already integrated DeepSeek’s latest model into their offerings, signaling growing interest in its potential.

DeepSeek Faces Security Concerns

However, DeepSeek’s rapid rise hasn’t come without its challenges. On January 27, the company announced that it would temporarily limit new registrations due to “large-scale malicious attacks” on its software. This move highlights the security risks that can accompany the rapid adoption of advanced AI technologies, as well as the growing scrutiny faced by DeepSeek and other players in the space.

The Bigger Picture

DeepSeek was founded in May 2023 by Liang Wenfeng in Hangzhou, China. The company's swift rise has raised alarms in the US tech sector, where industry leaders are concerned about the potential implications of a Chinese AI model challenging the dominance of US-based players like OpenAI, Google, and Microsoft.

The release of DeepSeek's R-1 model is a stark reminder of the global nature of AI innovation and the intense competition between China and the US in the development of artificial intelligence. While some analysts remain skeptical of the company’s claims, others are closely watching the developments, eager to see how this new model could impact the future of AI, both in terms of performance and cost efficiency.

Cryptocurrency Market Reacts

The broader cryptocurrency market also saw a decline on January 27, with Bitcoin (BTC) dropping 3.6% to a low of $98,930, although it has since recovered to around $101,500. The overall crypto market saw a 2% drop, according to CoinGecko data, highlighting the ripple effect that DeepSeek’s AI launch has had on global markets, including digital assets.

Conclusion

The release of DeepSeek’s R-1 AI model has sent shockwaves through the tech industry, challenging established players like OpenAI and raising questions about the future of artificial intelligence. While some US tech giants like Apple, Meta, and Amazon managed to weather the storm, others, such as Nvidia and Alphabet, experienced significant losses. As DeepSeek’s AI model continues to gain traction, the landscape of AI development and the global tech market may be poised for major shifts.

With security concerns and growing interest from various sectors, DeepSeek’s journey is one to watch closely in the coming months. The company’s innovative, cost-effective approach to AI could have lasting implications for both the tech and cryptocurrency markets, and it will be interesting to see how the US responds to this new competitor in the rapidly evolving AI race.