The start-up had become a key player in the “Chinese Large-Model Technology Avengers Team” that would counter US AI dominance, said another. China’s delight, however, spelled pain for several giant US technology companies as investors questioned whether DeepSeek’s breakthrough undermined the case for their colossal spending on AI infrastructure.

News from China upset U.S. markets this week and disrupted the frenzy that had built up around artificial intelligence.

As US companies pour billions of dollars into advancing artificial intelligence, a little-known Chinese startup has seemingly done the impossible. DeepSeek unveiled a chatbot app that performs as well if not better than those of Silicon Valley giants,