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DeepSeek AI stock sell-off: Top tech tech names crushed by China's push

Jan 27, 2025 - markets.businessinsider.com
Tech stocks experienced a significant decline on Monday as investors reacted to the launch of DeepSeek, a new AI model from China. This development has raised concerns about the dominance of major US tech companies like Nvidia, Broadcom, and Microsoft, which saw substantial intraday losses. The emergence of DeepSeek, which uses less advanced Nvidia chips, has challenged the prevailing view that massive AI spending is beneficial, leading to a broader market sell-off. The Nasdaq 100 dropped by 3.6%, while the S&P 500 and Dow Jones Industrial Average also saw notable declines.

The sell-off highlights the vulnerability of tech stocks with high valuations, as noted by David Bahnsen of the Bahnsen Group. Despite the downturn, some experts believe that DeepSeek could drive US tech firms to become more competitive. Nancy Tengler of Laffer Tengler Investments pointed out that companies like Meta are already responding to the challenge. Microsoft CEO Satya Nadella suggested that the rise of affordable AI models could lead to greater adoption of the technology, potentially benefiting the industry in the long run.

Key takeaways:

  • Tech stocks plunged as investors reacted to the debut of China's DeepSeek AI tool, impacting major US tech companies like Nvidia, Broadcom, and Microsoft.
  • DeepSeek's emergence challenges the dominance of US tech giants and raises concerns about the high valuations of AI and tech companies.
  • The Nasdaq 100 and other major indices experienced significant losses, with semiconductors and popular AI trade names seeing the deepest declines.
  • Some experts believe DeepSeek could push US tech firms to become more competitive, potentially accelerating the adoption of AI technology.
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