Stock Market Today: Tech stocks crash, Nvidia tumbles on China AI threat todayheadline

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U.S. equity futures tumbled in early Monday trading, with tech stocks leading across-the-board declines, following weekend developments that suggest a China-backed AI chatbot could outperform U.S. rivals with a lower cost base and fewer high-end processors. 

DeepSeek, a China-based startup that has reportedly used Nvidia’s  (NVDA)  lower-end H800 chips to build an AI training model for less than $6 million, overtook OpenAI’s ChatGPT chatbot as the world’s most-downloaded AI tool on the Apple  (AAPL)  App Store this weekend. 

The Hangzhou-based group claims its free-to-use, open-sourced chatbot can outperform U.S. rivals at a small fraction of the cost, a statement that, if true, could cast enormous doubt on the business models of tech giants such as Microsoft  (MSFT) , Meta Platforms  (META) , Amazon  (AMZN)  and Google parent Alphabet  (GOOGL) , who have collectively committed around $300 billion in capital spending this year alone.

Nvidia shares were marked 13.8% lower in premarket trading following the DeepSeek reveal, with Microsoft falling 6.8% and Meta falling 4.6%. 

“The investment case for the AI supply chain until now was that more spending led to better outcomes for AI models. Big tech firms Microsoft, Google, Amazon and Meta have deployed hundreds of billions to purchase GPUs from Nvidia and ensure chip supply to satisfy the insatiable demand for AI,” said Javier Correonero, Equity Analyst at Morningstar. “Deepseek is challenging that hypothesis.”

The moves come at bad time for the broader market, as well, which will navigate a busy week with 103 S&P 500 reporting December quarter earnings and the first Federal Reserve rate meeting of the year.

Markets are also nervously assessing the impact of President Donald Trump’s decisions to slap a 25% tariff on goods imported from Colombia after that country’s President refused to accept a flight filled with people recently deported under Trump’s new immigration crackdown. 

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Colombia eventually agreed to accept the flights, with Trump saying the tariffs were now “placed in reserve”, but the President’s willingness to wield such a blunt instrument in bi-lateral negotiations will raise the specter of further, and unpredictable, uses of the threat in the future.

Bond markets reflected both that caution and the larger implications of the tech stock collapse, with benchmark 10-year note yields falling 10 basis points to a Jan. 2 low of 4.521%. 

On Wall Street, the major tech sell-off has futures contracts tied to the Nasdaq, which is up 3.33% for the year, looking at an opening bell decline of more than 1,000 points in heavy premarket volume. 

The S&P 500, which rose 1.74% last week, is called 135 points lower with the Dow Jones Industrial Average braced for a 370 point decline. 

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In overseas markets, Europe’s Stoxx 600 was marked 0.63% lower in early Frankfurt trading, with chip design group ASML leading the broader declines with a 10.5% slump. Britain’s FTSE 100 fell 0.22% in London.

Overnight in Asia, Japan’s Nikkei 225 slumped 0.92% in Tokyo with the regional MSCI ex-Japan benchmark falling 0.29% into the close of trading.

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