China's AI gap with America narrows after DeepSeek R1 release
By
The Economist
Summary
China's AI capabilities have narrowed the gap with America significantly, 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. Despite the initial panic fading, global market valuations remain heavily tied to AI's promise of being both revolutionary and profitable.
Source
bskyChina's AI gap with America narrows after DeepSeek R1 releaseeconomist.comKey quotes
· 4 pulledAmerica's lead over China in artificial intelligence may be at its smallest in over a year.
When China disrupted the AI race in January 2025 with the release of DeepSeek R1, it erased $1trn from America's capital markets.
American investors were troubled not only because Chinese AI was good, but because it was being given away for free.
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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