DeepSeek, a Chinese artificial intelligence company, has sent shockwaves through the tech world with its claim of matching the abilities of advanced chatbots using fewer specialized computer chips. This development has investors rethinking the high valuations of companies like Nvidia, whose equipment powers the most advanced AI systems, and the enormous investments made by Alphabet, Meta, and OpenAI. The news caused a significant drop in U.S. markets on Monday, with the S&P 500 index falling 1.5 percent and the tech-heavy Nasdaq dropping 3.1 percent.
Nvidia was hit particularly hard, plunging 16.9 percent and losing roughly $600 billion in market value. The pain was concentrated at companies at the forefront of the AI boom, including multitrillion-dollar behemoths that have driven U.S. markets since the 1990s. DeepSeek’s rise has been unconventional, with its origins in finance rather than technology.
Its parent company, High-Flyer, began as a Chinese hedge fund using AI to make bets in the Chinese stock market. Pressured by regulatory crackdowns on speculative trading in China, High-Flyer pivoted toward pure AI research, leading to the creation of DeepSeek.
DeepSeek stirs U.S. market turbulence
However, cybersecurity experts have raised concerns about DeepSeek’s coding, which may be capable of transferring users’ data directly to the Chinese government. Ivan Tsarynny, CEO of Feroot Security, highlighted the unprecedented nature of this threat, stating, “We see direct links to servers and companies in China that are under government control. This is something we have never seen in the past.”
Users who register or log in to DeepSeek may unknowingly create accounts in China, making their identities, search queries, and online behavior visible to Chinese state systems.
DeepSeek’s code directs user data to CMPassport.com, affiliated with China Mobile, a government-owned telecommunications company banned from operating in the U.S. due to national security concerns. Rep. Josh Gottheimer (D-NJ), a member of the House Intelligence Committee, called for an immediate ban on DeepSeek for all government devices and urged public awareness. Rep.
Raja Krishnamoorthi (D-IL), the top Democrat on the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, expressed grave concern, stating, “This pattern of data collection is very familiar to those who study CCP-controlled apps. You use those apps at your own risk.”
As the rivalry between China and the United States over the domination of artificial intelligence continues, DeepSeek’s rise and the potential national security risks associated with its coding have brought new challenges to the forefront of the tech world.
