China narrows AI gap with America, sparking market turmoil
By
The Economist
Summary
China's AI capabilities have significantly narrowed the gap with America, as demonstrated by DeepSeek R1's release in January 2025 which wiped $1 trillion from US capital markets. Nvidia lost 17% of its value and the Nasdaq dropped 3.1% in a single day. American investors were alarmed not just by the quality of Chinese AI but by it being offered for free. While the initial panic faded, global market valuations have become increasingly tied to AI's promise of being both revolutionary and profitable.
Source
bskyChina narrows AI gap with America, sparking market turmoilecon.stKey quotes
· 5 pulledAmerican investors were troubled not only because Chinese ai was good, but because it was being given away for free.
When China disrupted the ai race in January 2025 with the release of DeepSeek r1, it erased $1trn from America's capital markets.
Nvidia, a chip firm, briefly shed 17% of its value; the Nasdaq sank by 3.1% in a day.
America's lead over China in artificial intelligence may be at its smallest in over a year.
Since then market valuations around the world have hinged ever more on the promise that ai will be both revolutionary and profitable.
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