DeepSeek released an open-source artificial intelligence model in December after saying that it took only two months and less than $6 million to create.

The tech-heavy Nasdaq index lost nearly 2.7 percent in early trading, with chipmaker Nvidia down nearly 12 percent.

Tech stocks plunged Monday morning, as fears mounted that Chinese artificial intelligence firm DeepSeek leapfrogged U.S. dominance in AI development.

DeepSeek topped the Apple AppStore chart and sparked fears the Chinese company is quickly catching up with OpenAI's ChatGPT while costing far less.

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Global chip stocks slumped Monday on DeepSeek revealing it had developed AI models that nearly matched American rivals despite using inferior chips.