New York — In a dramatic turn of events, Chinese AI startup DeepSeek announced on Monday that it will temporarily limit registrations following a cyberattack that disrupted its services. This comes as the company’s AI assistant skyrocketed to become the top-rated free application on Apple’s App Store in the United States, sparking global attention.

The Hangzhou-based firm, whose AI model DeepSeek-V3 rivals the most advanced proprietary systems globally, resolved issues relating to its application programming interface (API) and website login problems, according to its status page. The outages on Monday marked the company’s longest service disruption in 90 days, coinciding with a surge in its popularity.

A Disruptive Force in AI

DeepSeek’s groundbreaking AI assistant, launched on January 10, 2025, is touted for its data efficiency and cost-effectiveness, requiring a fraction of the investment compared to its competitors. The app's rapid rise underscores a potential shift in the AI landscape, with DeepSeek emerging as a serious contender to established players like Meta, Microsoft, and Alphabet.

Powered by the DeepSeek-V3 model, the startup claims its technology surpasses open-source benchmarks and competes with elite, closed-source systems. Developed on a modest budget of $5.6 million, DeepSeek’s achievement challenges the billions of dollars spent by US tech giants on AI advancements.

Nasdaq Hit by Chinese AI Surge

The sudden success of DeepSeek sent ripples through global markets, with the tech-heavy Nasdaq index slumping by 2.7% on Monday. Major AI players such as Nvidia, Meta, Microsoft, and Alphabet saw significant declines, with Nvidia alone losing over 11% of its market value—a staggering $400 billion.

"This feels like a Sputnik moment for AI," said venture capitalist Marc Andreessen, referencing the 1957 Soviet satellite launch that shook US dominance in space exploration.

A Challenge to US Tech Dominance

Analysts suggest DeepSeek’s rise signals a potential shift in the global AI race. "The focus is now on whether China can develop AI better, faster, and more cost-effectively than the US," said Kathleen Brooks, research director at XTB.

The milestone also casts doubt on the effectiveness of Washington's export controls aimed at curbing China’s access to advanced chips and AI technologies.

What’s Next for DeepSeek?

With its AI assistant garnering widespread acclaim and its app dominating the US App Store, DeepSeek is poised to disrupt the AI industry further. As US tech giants prepare to release their quarterly earnings this week, the pressure is on to address the rise of this low-cost Chinese competitor.

For now, DeepSeek's meteoric rise serves as a wake-up call for Silicon Valley, solidifying China’s position as a formidable player in the global AI race.

Source: DeepSeek Press Release, Market Data Analysis