China's AI Challenger Rattles Wall Street Titans

A competitor from China, DeepSeek, disrupts the artificial intelligence market, affecting major Wall Street tech stocks like Nvidia. The S&P 500 falls due to AI-related losses, with Nasdaq experiencing its worst drop in over a month. DeepSeek's success raises questions about the future of the AI industry.

Wall Street tech giants faced a turbulent Monday as DeepSeek, a Chinese competitor, unsettled the AI sector. The S&P 500 saw a 1.5% decline, heavily impacted by a 16.9% drop in Nvidia's stock. Other major tech corporations followed suit, dragging the Nasdaq composite down by 3.1% in its most significant downturn in over a month.

This shakeup comes as DeepSeek revealed a large language model poised to compete with established U.S. counterparts at a potentially lower cost. Despite US restrictions on AI technology output to China, DeepSeek managed to top the charts for free applications in Apple's App Store, a testament to its unexpected success.

The shock reverberated globally, with companies like ASML in Amsterdam and SoftBank in Tokyo seeing substantial stock declines. In the U.S., Constellation Energy's valuation plummeted amid these market jitters. Investors have turned to bonds, seeking safer havens amidst the volatility, lowering the yield of the 10-year Treasury to 4.52%.

(With inputs from agencies.)