U.S. tech stocks faced a dramatic sell-off at the opening of Wall Street trading as Chinese artificial intelligence startup DeepSeek unveiled advancements that raised concerns about America’s ability to maintain its lead in AI innovation. The Nasdaq Composite Index, heavily weighted in technology, slid 3.5% shortly after the opening bell, while the broader S&P 500 dropped by 2%.
Nvidia, one of the biggest beneficiaries of last year’s AI boom, saw its stock plunge by 13%. This sharp decline followed DeepSeek’s announcement of a new large language model that rivals AI products from U.S. tech giants OpenAI and Meta. Notably, DeepSeek has claimed that its innovation relies on significantly fewer Nvidia chips, challenging the U.S. semiconductor giant’s dominance in powering advanced AI systems.
The sell-off was part of a broader tech rout, with investors worried about the potential implications of DeepSeek’s strides in AI. While most of the “Magnificent Seven” tech companies suffered losses, Apple and Meta emerged as outliers. Apple’s stock climbed by 2.5%, and Meta gained 1.6%, as investors sought refuge in perceived “value plays.”
“Anything with consistent earnings and a more attractive valuation compared to speculative AI bets is becoming a safe haven,” said one trader who preferred to remain anonymous. Apple, known for its steady cash flows and regular dividends, stood out as a reliable option amid the market turbulence.
Market analysts described the shift as a rotation out of high-growth, speculative names like Nvidia into more stable options. “The market was due for a crack,” the trader added, underscoring the fragility of tech stocks amidst global competition in AI.
DeepSeek’s innovations represent a wake-up call for U.S. companies, as the Chinese startup continues to challenge the dominance of Silicon Valley in AI technology. The development comes at a time when AI leadership is increasingly seen as a critical driver of economic and geopolitical influence.
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