Nasdaq futures fell by 2.6% in Europe this morning, and Nvidia shares dropped 7% following news of the Chinese startup DeepSeek introducing low-cost artificial intelligence, shaking investors’ confidence in the sector’s future.

DeepSeek, a Hangzhou-based startup, launched its free assistant, DeepSeek-V3, which operates on less expensive chips and requires less data. This raised doubts about the sustainable growth of demand for high-tech chips and powerful data centers, which are considered the backbone of the artificial intelligence industry.

Nvidia shares, whose H800 chips were used to train the DeepSeek model, fell sharply on the news. Chip and equipment manufacturers like Advantest (-8.5%) and Tokyo Electron (-5%) also suffered significant losses.

“The emergence of DeepSeek shows that high technology does not necessarily require massive costs, forcing investors to reconsider their expectations,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.

In China, the index of artificial intelligence companies, CSI300, declined by 2.2%, but stocks related to big data grew by 4%. Experts suggest that the AI sector may become less capital-intensive, which could change investment strategies.

Despite the decline, DeepSeek’s popularity continues to grow: the application became the leader in free downloads on the App Store in the US, and investors are closely monitoring the situation.