ON MONDAY, $1 trillion was wiped off the value of America’s leading tech companies in a share crash caused by the tiny Chinese company DeepSeek.
DeepSeek is a Chinese artificial intelligence (AI) company that originated as a university startup several years ago.
AI has been the darling for capitalist investors in recent years with billions poured into buying up the shares of companies like Nvidia, the American company that produces the largest quantity of computer chips in the world, along with the other Silicon Valley giants like Apple and Google.
With their share prices rocketing into the stratosphere and with a virtual monopoly on chip production, these US tech companies laid claim to be the supreme masters of the AI future that capitalism holds for the world.
A future that crucially was dominated by the multi-billionaire US owners of these tech companies, who could use their monopoly to demand vast sums of money from governments for ‘development’. All this was completely upended last week by DeepSeek, which introduced its RI model which performs as well, if not better, than the AI products like ChatGPT.
What has stunned the tech companies is that DeepSeek produced this powerful AI model at a fraction of the cost and has released its computer code for the model as free downloads, making the most advanced technology available for free to anyone with a computer or mobile phone.
Significantly, this breakthrough in AI technology has been achieved despite the ban imposed by the first Trump presidency and later increased by Joe Biden on the sale of advanced computer chips to China.
This ban was an integral part of the US drive to stifle any technical development in China to ensure American capitalism’s position of dominance.
The founder of the company behind DeepSeek, Liang Wenfeng, said that they were purely focused on research rather than profits.
Interviewed on Chinese media he said: ‘AI should be affordable and accessible to anyone.’
DeepSeek has become the most downloaded free app in the US just a week after it was launched.
This has sent a massive wave of fear amongst all those speculators who have invested hundreds of billions in US tech companies on the promise of huge profits in return.
The reaction on the stock markets of the world was for share prices to crash in these tech companies, as the AI boom came to a shuddering halt and collapse.
Nvidia’s stock plunged by around $598 billion on Monday – the largest single day loss in US corporate history – while the personal fortune of the company’s Chief Executive Officer dropped by $21 billion.
According to Bloomberg, the world’s 500 richest people lost $108 billion on Monday.
This is a timely reminder to workers across the world of the fragility of the capitalist global economy and the vast wealth of the giant corporations and their bosses that can disappear overnight.
It also strikes another great blow at the supremacy of US imperialism which, despite all the sanctions against China, has failed to crush it economically.
Instead, China has surged forward economically showing how a workers’ state, even with bureaucratic distortions, is able to advance beyond a bankrupt world capitalist system that places profit before all else.
China builds and sells more electric vehicles than the rest of the world despite massive tariffs put on them by the US and EU.
The dream of an AI ‘revolution’ rescuing capitalism and ensuring vast profits for the ruling class – a dream shared by both Trump and Starmer – has now shattered, while the collapse of the stock markets proves conclusively the perilous position of the world financial system.
The ruling class will never peacefully relinquish its right to exploit and plunder the world for profit, but will lash out at its enemies in China and Russia along with its greatest enemy – the working class at home – in order to make them pay for its crisis.
The working class has the power to resolve this crisis by taking action to bring down its capitalist governments and putting capitalism out of its misery with the victory of the world socialist revolution.
