Stock Market Today: Tech stocks tumble, Nvidia tumbles on Chinese AI threat
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U.S. stock futures tumbled in early trading on Monday, with technology stocks leading the decline, as developments over the weekend suggested that China-backed artificial intelligence chatbots could leapfrog U.S. rivals with a lower cost base and fewer high-end processors.
According to reports, DeepSeek is a Chinese startup that uses Nvidia’s (NVDA) Using low-end H800 chips to build an AI training model for less than $6 million, surpassing OpenAI’s ChatGPT chatbot and becoming the most downloaded AI tool in the world on Apple (AAPL) App Store this weekend.
The Hangzhou-based company claims its free-to-use, open-source chatbot can outperform U.S. rivals at a fraction of the cost, a claim that, if true, could cast huge doubts on the business models of tech giants like Microsoft. (Microsoft Corporation) meta platform (Mehta) Amazon (Amazon) and Google parent company Alphabet (Google) This year alone, they have collectively committed about $300 billion in capital spending.
After DeepSeek disclosed the news, Nvidia’s stock price fell 13.8% in pre-market trading, Microsoft fell 6.8%, and Meta fell 4.6%.
Patrick T. Fallon/Getty Images
“The investment case for the AI supply chain so far is that more spending leads to better results for AI models. Big tech companies Microsoft, Google, Amazon, and Meta have invested hundreds of billions of dollars buying GPUs from Nvidia. , and ensuring wafer supply to meet customer demand. “Deepseek is challenging this assumption. “
These moves also come at a bad time for the broader market, which is set for a busy week as 103 companies in the S&P 500 will report December quarter earnings and the Federal Reserve will hold its first interest rate meeting of the year.
Markets are also nervously assessing the impact of President Donald Trump’s decision to impose 25% tariffs on imports from Colombia after the Colombian president refused to accept flights carrying people recently deported under Trump’s new immigration crackdown.
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Colombia eventually agreed to accept the flights, and Trump said the tariffs were now “in place,” but the president’s willingness to use such blunt tactics in bilateral negotiations will raise concerns about further, unpredictable use of the threat in the future.
The bond market reflected both that caution and the broader impact of the tech crash, with the benchmark 10-year Treasury yield falling 10 basis points to a Jan. 2 low of 4.521%.
On Wall Street, the main tech selloff was in futures contracts tied to the Nasdaq, which has gained 3.33% this year, after opening down more than 1,000 points on heavy premarket trading.
The S&P 500 index rose 1.74% last week and is expected to fall 135 points, while the Dow Jones Industrial Average will fall 370 points.
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In overseas markets, the European Stoxx 600 Index fell 0.63% in early trading in Frankfurt, led by chip design group ASML, which fell 10.5%. Britain’s FTSE 100 fell 0.22% in London.
Overnight in Asia, Japan’s Nikkei 225 index fell 0.92% in Tokyo and the MSCI ex-Japan regional benchmark index fell 0.29% at the close.
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