Despite the negative financial impact, Nvidia praised DeepSeek’s breakthrough. “DeepSeek is an excellent A.I. advancement and a perfect example of test time scaling,” a company spokesperson told Observer in a statement.

The market reaction proved particularly severe for Nvidia (NASDAQ: NVDA), with shares plummeting and erasing half a trillion in market cap at the time of this writing. To put this staggering figure in perspective,

Social media exploded in a celebration after the news that a Chinese start-up had made an artificial intelligence tool that was more efficient than any in the United States.

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.

The U.S. tried to slow China’s advances, but the startup showed how hard that is.