DeepSeek Saga: How It Impacted Indian AI and IT Stocks

The US Silicon Valley had anything but a peaceful weekend. Amid ongoing policy surprises from President Donald Trump, the unexpected emergence of a relatively unknown Chinese AI platform, DeepSeek, sent ripples through the global technology sector. DeepSeek’s AI assistant overtook OpenAI’s ChatGPT on Monday to become the top-rated free app on Apple’s App Store in the US, sparking conversations about America’s technological dominance.

What is DeepSeek, and Why the Buzz?

DeepSeek, developed by a Hangzhou-based startup founded in May 2023, debuted in the US on January 10, 2025. Within just 17 days of its launch, DeepSeek’s AI assistant, powered by the DeepSeek-V3 model, rose to prominence, drawing significant attention for:

• Cost-effectiveness: DeepSeek claims to deliver AI solutions at a fraction of the cost of competitors.
• Efficiency on reduced-capability chips: The ability to operate without advanced chip requirements gives DeepSeek a strategic edge.

These factors raise questions about the dominance of US tech giants like Nvidia and the effectiveness of export controls imposed by Washington to curb China’s advancements in AI and chip technology.

DeepSeek’s Impact on the Global Tech Landscape

DeepSeek’s rise has positioned it as a formidable competitor to OpenAI, Google, and Meta, shaking up the global AI sector. Its claim to rival cutting-edge closed-source AI models has caused a domino effect across global stock markets:

• US Markets: A sharp sell-off was seen in the tech stocks. 
• Impact on Indian Stocks: Shares of companies linked to electronics manufacturing and AI-related components, such as Dixon Technologies and Kaynes Technology, experienced notable declines.

DeepSeek’s Effect on Indian AI and IT Stocks

The emergence of DeepSeek has also impacted Indian technology stocks. The Nifty IT index fell sharply by 3.35% on January 27, 2025, continuing its downward trend with an additional 0.57% drop the next day. Key players in India’s AI-driven electronics and IT sectors witnessed sell-offs triggered by broader market reactions to DeepSeek’s rise.

Broader Implications

DeepSeek’s meteoric rise highlights a critical shift in the AI race, challenging the supremacy of traditional leaders in the field. It underscores how cost-effective models and innovation can disrupt global markets, reshaping perceptions of technological dominance. Moreover, it casts doubts on the efficacy of US export controls in restricting China’s AI advancements, especially when newer technologies can thrive on less advanced hardware.

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