Silicon Valley and Washington leaders said the app shows China can challenge the U.S. The Nasdaq lost 3 percent and chipmaker Nvidia shed $589 billion in market capitalization.

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

In a matter of days, DeepSeek proved to be so popular as to climb to the top of Apple's App Store, surpassing OpenAI's ChatGPT as the most downloaded app. But for owners of Nvidia stock, and stock traders in general, DeepSeek is on track of becoming a black swan — an unexpected event with extreme consequences.