Major U.S. tech stocks, including Nvidia, Microsoft, Meta, and Tesla, faced a potential $1 trillion loss on Monday amid fears of a breakthrough Chinese AI model.
Nvidia shares dropped nearly 13% in early trading, wiping out hundreds of billions in value after news surfaced about DeepSeek, a Chinese startup that launched a free, open-source large-language model in December.
DeepSeek claims it developed the model in just two months for under $6 million, without relying on Nvidia’s top chips— a stark contrast to the billions spent by Western tech giants on AI research and hardware.
From The New York Post:
The model’s launch — referred to by tech investor Marc Andreessen as “AI’s Sputnik moment” — triggered a global meltdown that slammed AI firms and chipmakers.
It cast doubt over the thesis behind the industry’s entire supply chain and whether America actually has an advantage over its chief geopolitical rival.
“The DeepSeek announcement from China was nothing short of a financial Scud missile aimed at a US market that is much more fragile than most will admit,” said Islanda Capital Investments CEO Anthony Esposito, who noted that AI hype has driven markets to all-time highs.
“Unfortunately, I see more downside to come in the coming months,” Esposito added.
The so-called Magnificent 7 stocks — Apple, Nvidia, Google parent Alphabet, Tesla, Microsoft, Meta and Amazon — were hit hard in the selloff.
Alphabet fell more than 2%, while Microsoft, which has plunged billions of dollars into Sam Altman-led OpenAI, fell nearly 3%. Shares of Amazon, Elon Musk’s Tesla and Mark Zuckerberg’s Meta were also trading lower. Just one, Apple, was trading higher.
At the start of the trading day, stocks were on pace for more than $1 trillion in losses.
This story is developing…
Nvidia shares fall 12% as Chinese AI startup DeepSeek triggers panic selloff on Wall Street https://t.co/JnoIPFPuYw pic.twitter.com/P8qpmuDKes
— New York Post (@nypost) January 27, 2025
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