Tech stocks have taken a hit globally after China’s DeepSeek launched a competitive AI chatbot at a much lower cost than US counterparts. This has stirred market fears of a $1.2 trillion loss across tech companies when trading opens in New York.

DeepSeek’s chatbot quickly topped download charts and surprised experts with its capabilities, developed for only $5.6 million.

The Nasdaq dropped over 3% in premarket trading, with major firms like Nvidia falling more than 10%. SoftBank also saw losses shortly after investing in a significant US AI venture.

Venture capitalist Marc Andreessen called it “AI’s Sputnik moment,” highlighting its potential impact on the industry.

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