Leaders in Washington and Silicon Valley claimed the software demonstrates China's ability to compete with the United States. Chipmaker Nvidia saw a $589 billion decline in market value, while Nasdaq saw a 3% decline.

On Monday, the rapid rise in popularity of a Chinese AI program called DeepSeek shook tech stocks and enthralled Silicon Valley, sparking discussion on how the US can continue to dominate in AI in both political and tech circles.

After being released last week by a Chinese start-up of the same name created in 2023, the DeepSeek app shot to the top of the downloads chart in the Apple store over the weekend and stayed there on Monday. The application provides features that are comparable to those of OpenAI's well-known ChatGPT chatbot, producing text and responding to user inquiries.

The notion that being at the forefront of AI requires billions of dollars has been called into question by DeepSeek's debut.

Liang Wenfeng, a co-founder of the hedge firm High-Flyer, established DeepSeek, which claims to have devised methods for producing the AI models required to power chatbots and other technologies at a lower cost. It asserts that in order to create AI software that can match the technology of its American competitors, it needs fewer and less sophisticated processors.