Tech stocks experienced a sharp decline on Monday, fueled by concerns that DeepSeek, a Chinese AI firm, has surpassed U.S. technological leadership in AI development. DeepSeek's open-source model, reportedly developed in just two months and costing less than $6 million, has sparked fears that China is rapidly catching up with the U.S. in AI capabilities. Nvidia, a major chipmaker, saw its shares plummet by 13%, leading to a potential market value drop that could be the largest in U.S. stock market history. Other semiconductor companies, mega-cap tech firms, and even power companies linked to AI infrastructure also suffered significant losses.
Tech stocks plunged Monday morning, as fears mounted that Chinese artificial intelligence firm DeepSeek leapfrogged U.S. dominance in AI development. The Nasdaq Composite, which tracks the country's largest tech firms, plunged 3.4% at the opening bell. The Dow fell 180 points and the S&P 500 tumbled almost 2%.
Meta Platforms, which is developing its own open-source AI model, fell almost 2%. Worries about DeepSeek's alleged advances come despite export controls on sales of advanced semiconductors to China. Speaking at the World Economic Forum last week, Microsoft CEO Satya Nadella said DeepSeek's advances appeared to be 'super impressive ... and super-compute efficient.' “We should take the developments out of China very, very seriously,” Nadella added.
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