Photo Courtesy of AP
Big U.S. tech companies, which soared during last year’s AI boom, are now taking a hit after a little-known Chinese startup unveiled a chatbot it claims can rival the likes of OpenAI and Google, and at a fraction of the cost.
Chipmakers Nvidia and Broadcom both saw double-digit losses following the demonstration from DeepSeek, a Chinese AI company. Oracle, which is a key player in the Trump administration’s $500 billion AI partnership, dropped 8%. Microsoft slid 3.8%, Amazon fell 3.3%, and both Google’s parent Alphabet and Meta lost around 3.5% each.
These tech stocks have increasingly influenced the direction of U.S. markets, which took a hit Monday. Futures for the S&P 500 dropped 2.1%, while the Nasdaq futures plummeted 3.8%. Dow futures dipped 0.7%.
Dan Ives, an analyst at Wedbush Securities, acknowledged that DeepSeek’s AI technology is impressive but still believes the U.S. tech sector is far ahead in terms of infrastructure. “Launching a competitive AI model for consumer use is one thing,” Ives said in a note. “Building a full-scale AI infrastructure is a different challenge altogether, and nothing we’ve seen from DeepSeek changes that view.”
Across the pond, European markets were down, with Germany’s DAX dropping 0.9%, the CAC 40 in Paris losing 0.6%, and the UK’s FTSE 100 down 0.2%.
In Asia, Hong Kong’s Hang Seng gained 0.7%, buoyed by gains in Alibaba (up 2.9%) and Baidu (up 4.9%). However, China’s Shanghai Composite index edged down 0.1% after a survey showed export orders falling to a five-month low. Tokyo’s Nikkei 225 also lost 0.9%, extending losses after the Bank of Japan raised its key interest rate to 0.25%, the highest since 2008.
Chipmakers in Japan were particularly hard-hit, with Tokyo Electron dropping 4.9% and Advantest sinking 8.6%.
The U.S. dollar dipped against the Japanese yen, moving from 155.72 yen to 155.29. The euro edged up to $1.0529 from $1.0483.
Energy markets saw a slight decline in prices, with U.S. crude down 61 cents to $74.05 per barrel, while brent crude fell 66 cents to $76.89.
Meanwhile, many Asian markets were closed for holidays, and attention is now turning to the Federal Reserve’s policy meeting later this week. While recent weak economic data has raised some concerns, traders are largely expecting the Fed to hold its interest rates steady for now, according to data from CME Group.
