Categories: Business

Wall Street plummets as Chinese AI Startup disrupts tech

Nasdaq in New York.

Wall Street faced a major downturn Monday morning, with indexes plunging after fears were triggered by a Chinese artificial intelligence startup.

America’s top tech stocks saw significant losses, driven by concerns of overvaluation.

$1 Trillion Wiped Out in Tech Sell-Off

Investors dumped around $1 trillion in technology stocks during premarket trading, sending the S&P 500 down 1.7% and the Nasdaq tumbling more than 3% shortly after markets opened at 9:30 a.m.

The panic stems from DeepSeek, a Chinese AI startup that showcased a chatbot claiming to rival leading models from OpenAI and Google—but at a fraction of the cost. The demonstration cast doubts on the profitability and competitiveness of U.S. tech giants.

Major Players Hit Hard

Chipmaker Nvidia, a key beneficiary of the recent AI boom, took an 11% hit, erasing $465 billion in market value—the largest single-day market loss in history, according to Bloomberg. Other key players suffered as well:

Broadcom fell 12%.
Oracle slid 8%.
Microsoft dropped 3.5%.
Amazon dipped 0.24%.
Alphabet and Meta lost 3.5% and 2.5%, respectively.

The shockwave extended beyond U.S. markets, with Stoxx Europe 600 falling 0.4% and notable losses in Germany’s DAX (-1.1%), France’s CAC 40 (-0.8%), and Britain’s FTSE 100 (-0.3%).

DeepSeek’s Disruption

DeepSeek’s advancements are challenging the U.S.’s dominance in AI innovation. The company’s free AI assistant, released last week, requires fewer Nvidia chips and is significantly more cost-efficient than existing models. On Monday, it overtook ChatGPT to become the most-downloaded free app on the U.S. Apple Store.

Global Fallout

The impact reverberated across international markets:

Dutch chipmakers ASML and ASM dropped 8% and 12%.
Japanese chip stocks, including Advantest and Tokyo Electron, also declined sharply.

Warnings of Overinflated Valuations

The sell-off comes as JPMorgan Chase CEO Jamie Dimon recently warned of inflated asset prices, noting that U.S. stock valuations are in the top 10–15% historically. The market’s 20% gains in both 2023 and 2024—a feat not seen since the late 1990s—are now being questioned in light of DeepSeek’s disruptive technology.

As Wall Street grapples with this seismic shift, the future of global AI dominance hangs in the balance.

Herbert Bauernebel

Herbert Bauernebel has been reporting from New York since 1999 and currently works for Bild.de, OE24 TV, and US Live. He also runs the news portal AmerikaReport.de. Bauernebel has covered nearly all major US events of the past quarter-century, including 9/11, Hurricane Katrina, Barack Obama’s election, Donald Trump’s surprise victory, the pandemic, last year’s election showdown, as well as natural disasters such as hurricanes and oil spills. He has also reported firsthand on international events, including the Asian tsunami, the Haiti earthquake, and the Fukushima disaster. He lives in Brooklyn with his family and holds degrees in communication and political science from the University of Vienna. Bauernebel is the author of a book about his experiences on 9/11, And the Air Was Full of Ash: 9/11 – The Day That Changed My Life.