Nasdaq Nosedive: DeepSeek's AI Disrupts Tech Stocks

Tech investors were hit hard as the rise of Chinese AI model DeepSeek led to a selloff in AI-related stocks. Nvidia saw a significant drop, while other major tech stocks fell on Monday. DeepSeek's assistant ranked top on the App Store, challenging U.S.-based AI solutions.

The technology sector faced turbulence on Monday as Nasdaq futures plummeted, driven by the unexpected success of a cost-effective Chinese AI model. The resultant selloff in AI-related stocks saw megacaps like Nvidia experiencing significant losses.

DeepSeek, a Chinese startup, has introduced a free AI assistant utilizing lower-cost chips and minimal data, which appears to challenge prevailing expectations in financial markets. Richard Hunter of Interactive Investor cautions that while it's premature to view DeepSeek as a threat to U.S. AI solutions, its emergence is causing market reevaluations.

The popularity of DeepSeek's AI Assistant, which overtook ChatGPT as the top free app in the U.S. App Store, contributed to the decline. Key players such as Nvidia, AMD, and Micron saw sharp declines, adding to an already tense market environment influenced by looming Federal Reserve decisions and international trade concerns.

(With inputs from agencies.)