Nvidia Takes a Hit as Chinese AI Model Shakes Up Semiconductor Market

The S&P 500 and Nasdaq fell sharply, mainly due to a sell-off in Nvidia and other chipmakers. This comes amid the rise of a free AI assistant from Chinese startup DeepSeek, raising concerns about U.S. leaders’ future in the AI market. Investors are closely watching Federal Reserve actions and tech earnings.

The S&P 500 and Nasdaq experienced significant drops on Monday, spurred by a sell-off in Nvidia and other chipmakers. The decline was fueled by investor apprehensions over the growing popularity of a low-cost Chinese AI model, potentially threatening the future prospects of U.S. leaders in artificial intelligence.

DeepSeek, a Chinese startup, recently launched a cost-effective AI assistant that has outpaced U.S. competitor ChatGPT in Apple's App Store downloads. This has raised concerns among investors about the expected surge in demand for AI driving the supply chain from chipmakers to data centers.

Additional factors influencing the market include the Federal Reserve's anticipated decision to maintain its interest rate and the U.S.'s recent trade discussions with Colombia. Earnings reports from major tech firms, including Microsoft, due this week, will be crucial for investors.

(With inputs from agencies.)