US stocks were set for a steep selloff Monday morning after a surprise advancement from a Chinese artificial intelligence company, DeepSeek, threatened the aura of invincibility surrounding America’s technology industry.

The app has surged in popularity since its launch in January, challenging the widely-held belief that America is the untouchable leader of the AI industry. It is powered by the open-source DeepSeek-V3 model,

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.

The tech-heavy Nasdaq index lost nearly 4 percent in early trading Monday, with chipmaker Nvidia down nearly 12 percent.

The Chinese AI service has Wall Street worried that it will be cheaper than expected to develop models. But as chip stocks sink, some analysts see a silver lining.