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.

An AI-powered chatbot by the Chinese company DeepSeek has quickly become the most downloaded free app on Apple's store, following its January release in the US. The app's sudden popularity, as well as DeepSeek's reportedly low costs compared to those of US-based AI companies, have thrown financial markets into a spin.