DeepSeek hits Us Stock Market: Wall Street took a major tumble on Monday. The sharp decline followed growing concerns among investors about the future of leading US AI companies, as the rising popularity of the more affordable Chinese artificial intelligence model, DeepSeek, sparked uncertainty. The S&P 500 and Nasdaq closed significantly lower on Monday, driven by a sell-off in Nvidia and other chipmakers.
Nvidia, a key player in powering leading AI models with its chips, saw a steep drop of 17%, erasing over $590 billion from its market value and dimming the shine of one of Wall Street’s top-performing stocks. The Nasdaq Composite, dominated by tech stocks, fell 3.1%, while the S&P 500 dropped 1.5%, pulling back after hitting a record high last week. In contrast, the Dow Jones Industrial Average, less influenced by Big Tech, managed a 0.7% gain for the day.
Why did DeepSeek hit US companies like Nvidia?
News of DeepSeek making a major AI breakthrough at a low cost shook the US stock market, hitting companies that have benefited from AI’s growth, such as chipmakers, infrastructure providers, and energy stocks. Many stocks saw steep losses. Oracle fell 14%, Super Micro Computer, a server maker for AI, dropped 13%, and chipmaker Broadcom slid 17%. The selloff erased about $1 trillion from the stock market’s value, according to Dow Jones Market Data.
The reason behind this is quite simple actually. DeepSeek was reportedly created at a much lower cost than its US competitors, hundreds of millions of dollars less, raising concerns about the future of America’s lead in Artificial Intelligence. News of these lower costs shook financial markets on January 27, causing the tech-heavy Nasdaq to drop over 3% in a global sell-off that hit chipmakers and data center stocks.
Nvidia, a US company known for producing the powerful chips used in AI, took the hardest hit. Its stock price dropped 17% in a single day, wiping out nearly $600 billion in market value—the largest one-day loss for any U.S. company in history.
Monday’s decline marked a sharp turn for the market, which has been near record highs since President Trump’s election. Investors had been optimistic about the pro-business policies and the booming performance of AI-related, but those gains have now came under a pressure.