Nvidia plummets 11% to lead global tech sell-off as China's DeepSeek raises questions about AI

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Stocks Sink as Investors Worry About China’s A.I. Advances
Stiffer competition for the tech giants at the forefront of the artificial intelligence boom prompted investors to reassess the companies’ sky-high valuations and aggressive spending plans.

A jolt of panic hit big technology stocks on Monday, with investors rattled by fears that advances in artificial intelligence by Chinese upstarts could threaten the moneymaking power of tech giants in the United States, Europe and beyond.

The Chinese A.I. company DeepSeek has made waves by matching the abilities of cutting-edge chatbots while using a fraction of the specialized computer chips that leading A.I. companies rely on. That has prompted investors to rethink the large returns they are expecting on the heady valuations of chipmakers like Nvidia, whose equipment powers the most advanced A.I. systems, as well as the enormous investments that companies like Google, Meta and OpenAI are making to build their A.I. businesses.

U.S. markets tumbled at the open, with the S&P 500 slumping more than 2 percent and the tech-heavy Nasdaq dropping 3.5 percent. Tech stocks also dented markets in Europe and Japan.

The pain was concentrated at companies at the forefront of the A.I. boom, including the multitrillion-dollar behemoths that drove the largest back-to-back annual gains for U.S. markets since the 1990s. Investors have fretted about whether the rally has gone too far, leaving little room for error at the small group of tech firms that now dominates the market.

For those waiting for a something to shake the faith in tech valuations, DeepSeek could be the start a new phase in how investors think about A.I., said Steve Sosnick, chief strategist at Interactive Brokers. He called the latest reports of increased competition in the industry a “big slap in the face” for investors that could reset the way they calculate risk.

Nvidia was down about 13 percent in early trading, a move that erases hundreds of billions of dollars in market value. Other chipmakers like AMD and Arm, and semiconductor equipment specialists like ASML also recorded substantial declines. The emergence of DeepSeek, which unveiled its new system last month but grabbed the tech world’s attention with a research paper last week detailing how it built the technology, “serves as a reminder that competition in the global A.I. arena is intensifying, and Nvidia may not be in the pole position forever,” Charu Chanana, chief