US Stock Market News LIVE: 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 a competitor in China. Big Tech stocks that have been the market’s biggest stars took the heaviest losses, with Nvidia down 16 per cent, dragging the Nasdaq composite down 3.1 per cent.
Nasdaq futures had dropped five per cent in pre-market trading along with the major US technology stocks amid fears that a more affordable AI model from China could challenge the dominance of US tech companies. Nvidia, the leading provider of chips for AI applications, saw a 12.3 per cent decline in premarket trading.
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 has raised questions over Microsoft Corp., Meta Platforms Inc., and Alphabet Inc.’s hundreds of billions in planned spending on the technology. 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 spent by the US tech giants. The open-source product has quickly risen to the top of Apple Inc.’s App Store rankings.