Nasdaq futures plunged 4.3% on Monday, leading a sell-off on Wall Street after a Chinese startup, DeepSeek, challenged US dominance in artificial intelligence (AI). Contracts for the S&P 500 fell 2.4%, while Dow Jones Industrial Average futures dropped 0.9%—about 380 points.
DeepSeek’s claim that its AI assistant operates efficiently with cheaper chips and less data has sent shockwaves through tech-heavy stocks, raising questions about the profitability of US AI giants. Nvidia (NVDA), a key player in AI chips, saw its shares sink over 11% in pre-market trading. Other chipmakers, including ASML (-9%) and Broadcom (AVGO), also took significant hits.
Tech giants Microsoft (MSFT) and Meta (META) dropped 6% each, as concerns mounted over their large AI investments. Amazon (AMZN) and Tesla (TSLA) were also affected, fueling broad tech sector declines.
Investors are bracing for Big Tech earnings reports this week from Apple, Meta, Tesla, and Microsoft, hoping for clarity on future AI-driven revenue amid rising competition from DeepSeek.
Meanwhile, trade war fears resurfaced after former President Donald Trump threatened tariffs on Colombian goods, briefly reviving concerns about economic tensions before a last-minute deal was struck.
The Federal Reserve is set to hold its first policy meeting of 2025 this week, with interest rates in focus. Trump’s renewed pressure on the Fed to lower rates adds another layer of uncertainty for markets already shaken by AI disruptions.