US Stock Market News Highlights: Wall Street tumbled on Monday, January 27, on fears the big US companies that have feasted on the artificial intelligence (AI) frenzy are threatened by DeepSeek, an AI competitor in China. Big Tech stocks that have been the market’s biggest stars took the heaviest losses, with Nvidia down 17%, dragging the Nasdaq composite down 3% amid fears that a more affordable AI model from China could challenge the dominance of US tech companies.
DeepSeek rattles Silicon Valley
DeepSeek, which overtook the rival AI platform ChatGPT to become the top-rated free application on Apple’s App Store in the United States, says it uses lower-cost chips and less data, challenging a widespread bet in markets that AI will drive demand along a supply chain from chipmakers to data centres.
DeepSeek’s quick dominance raised questions over Microsoft., Meta Platforms, and Alphabet’s hundreds of billions in planned spending on AI. The recently launched AI model is now seen as a strong rival to those from OpenAI and Meta Platforms Inc., as it is more cost-effective and operates on less powerful chips.
The DeepSeek-V3 model was developed with an investment of $5.6 million, a fraction of the amounts the US tech giants spent. The open-source technology product has quickly risen to the top of Apple Inc.’s App Store rankings.