The DeepSeek Effect: DeepSeek has recently been hit by a cyber-attack. The tech giants often referred to as the “Magnificent Seven”—Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla—are called magnificent not only because of their massive valuations and investments in artificial intelligence but also due to their dominance in the stock market. Together, these seven stocks account for over one-third of the total value of the S&P 500, which indexes the top 500 companies in America. When these companies stumble, the market feels the impact. On a recent Monday, the stock markets suffered heavy losses, with one trillion dollars erased in a single day, largely due to the influence of the Chinese AI company, DeepSeek. The company has unveiled impressive AI models and chatbots that are giving American rivals like ChatGPT and Gemini a run for their money. DeepSeek’s models are cost-effective, developed with just a few million dollars of investment and trained on less advanced chips, yet they perform nearly as well as their Western counterparts. This has left the market in a frenzy. On that day, the stocks of the Magnificent Seven were in sharp decline—almost resembling a Chinese flag due to the volume of losses. NVIDIA was the biggest loser, experiencing its worst day since 2020, with shares plunging 17%, wiping out 600 billion dollars in market value, marking the largest fall in U.S. stock market history. Other tech giants were also affected; Alphabet lost 100 billion dollars, while Microsoft saw a loss of 7 billion dollars. Overall, it was a chaotic Monday for America’s tech sector, and the losses extended to the world’s richest individuals, who collectively lost 108 billion dollars. Leading the downturn was Jensen Huang, CEO of NVIDIA, whose fortune took a 20 billion dollar hit. Interestingly, Huang had a surprising take on DeepSeek, calling it “an excellent advancement.”

He noted that while DeepSeek’s models were trained using NVIDIA chips, they still represent a significant opportunity for the AI market. Many viewed the dramatic reaction in stock prices as an overreaction. While NVIDIA and other U.S. tech giants may face challenges, it does not spell doom for them. However, the same cannot be said for OpenAI, the creator of ChatGPT. OpenAI CEO Sam Altman praised DeepSeek, stating, “DeepSeek R1 is an impressive model, particularly for what they are able to deliver at the price. We will obviously deliver much better models, and it’s invigorating to have a new competitor!” Despite Altman’s optimism, DeepSeek has trained its models for merely 6 million dollars, a stark contrast to OpenAI, which is burning through 5 billion dollars a year. Moreover, while DeepSeek’s services are free for users, ChatGPT comes with a significant price tag. For consumers, choosing DeepSeek becomes an obvious choice, leading millions to flock to the platform, making it the highest-rated free app in the United States. However, with great success also comes significant risk.

DeepSeek faced serious challenges when it was hit by a severe cyber-attack, forcing the company to limit registrations. They described the incident as a large-scale malicious attack, although they have not provided further details. The timing of this attack has raised suspicions, with some speculating that the U.S. might be involved. Despite critiques and conspiracies, the rise of DeepSeek serves as a reminder that innovation does not always require billion-dollar investments. The Magnificent Seven may still dominate the market, but they are not invincible. Recent sell-offs could signal that the next big revolution might not originate from Silicon Valley. The competition for AI supremacy is more than just a technological race; it’s a struggle to control the future. While tech companies will be at the forefront, they won’t be alone. As the competition heats up, politicians are beginning to take action, a trend we are already witnessing in the US. Donald Trump has commented on the breakthrough of DeepSeek, stating that it should serve as a wake-up call for Silicon Valley. He emphasized that the release of DeepSeek AI by a Chinese company should alert American industries to the need for intense focus and competition, noting that the US possesses some of the greatest scientists—a sentiment echoed by Chinese leaders.

So, how is America responding? Their strategy has been two-pronged. The first part of this strategy involves restricting chip supplies; advanced chips are essential for creating AI platforms, and most of them are manufactured by NVIDIA. In fact, DeepSeek was trained using NVIDIA chips. The US has cut off the sale of these advanced chips to China, marking the first phase of their approach. The second strategy involves investing domestically; President Biden has announced billions of dollars in support for the chip industry, and Donald Trump recently introduced a massive private AI venture worth $500 billion. The US aims to replicate its past success in the space race. Although the Soviet Union initially led with the first satellite and the first man in space, the US eventually overcame that lead and won the space race comprehensively. How did they accomplish this? Space exploration became a national mission, uniting private companies, government agencies, and ordinary citizens in a common goal. American companies, while often portraying themselves as global institutions, show a clear loyalty to the United States.

For example, Google is planning to update its maps to reflect President Trump’s renaming of the Gulf of Mexico to “Gulf of America.” Although this change hasn’t yet appeared in official documents, once it does, US users will see the updated name, while users outside the US will still see both names. This reflects a broader trend of collaboration between big tech and the US government. The benefits for tech companies are significant. They can influence US policy and leverage America’s role in global affairs. For instance, Europe has accused big tech firms of anti- competitive practices, imposing fines totaling about $15 billion collectively on Apple and Google. President Trump has criticized these fines and threatened tariffs in retaliation, claiming it is unfair for foreign countries to impose penalties on US firms. The US government, in turn, benefits by gaining access to user data and securing contracts with the military, as well as leverage over both rivals and allies, since big tech companies operate globally. The success of China’s DeepSeek serves as a wake-up call not only for Silicon Valley but for every country in the world. The ultimate goal should be to own the technology—this enables regulation and ensures it functions fairly. Without ownership, countries risk becoming mere spectators. While American tech leaders, like Mark Zuckerberg, may avoid testifying before Congress, they are protected by the US government from similar scrutiny in places like Europe or India. In the realm of artificial intelligence, we are witnessing American companies and the US government moving to monopolize yet another industry.

What can other countries, like India, do in response? For starters, DeepSeek serves as an encouraging sign. It was developed without a massive budget, addressing prior concerns that building AI models required extensive funding. However, a question remains: does anyone want an AI model like DeepSeek? So far, there have been no indications from the Indian government about a desire to develop such a model. The private sector in India appears divided on this issue. Infosys Chairman Nandan Nilekani believes that India should avoid investing in large-scale AI models and instead focus on practical applications of artificial intelligence. Conversely, some private sector leaders argue that large models are necessary. This lack of consensus could hinder India’s AI progress. India needs a national mission to create sovereign tech assets. Previous technologies such as the Internet, social media, 4G, 5G, and even smartphones were not developed with a similar strategy. If India misses the opportunity presented by AI, it risks repeating past mistakes.