Mon Jan 27 18:17:45 UTC 2025: ## AI Upstart Shakes Up Wall Street, Sending Tech Stocks Plunging

**New York, NY –** A free, low-cost Chinese AI assistant, launched by startup DeepSeek, sent shockwaves through the US stock market Monday, causing the S&P 500 and Nasdaq to hit their lowest levels in over a week. The unexpected popularity of DeepSeek’s AI, which topped Apple’s App Store and reportedly utilizes cheaper technology than competitors, fueled investor concerns about the future demand for high-end AI components.

Nvidia, a major beneficiary of the AI boom, saw its stock plummet 11.7%, dragging down the broader semiconductor index by 6.5%. Other tech giants also suffered significant losses, with Microsoft, Meta, and Alphabet falling between 2.2% and 3.5%. AI server manufacturers Dell and Super Micro Computer experienced even steeper declines. The technology sector as a whole shed 4.5%.

The market’s apprehension was reflected in the Cboe Volatility Index (“fear gauge”), which surged to its highest point since December 20. The Dow Jones Industrial Average also fell, though less dramatically.

The unexpected success of DeepSeek’s AI model raises questions about the long-term growth trajectory of the AI sector, prompting investors to reassess valuations. Adam Sarhan, CEO of 50 Park Investments, warned that the market may need a significant repricing to reflect the potential disruption. The energy sector also took a hit, with power companies anticipating reduced demand as AI development’s energy needs may be less than previously anticipated.

Despite the overall downturn, AT&T bucked the trend, rising 6.5% on strong fourth-quarter results. Investors await further news from other tech giants – Microsoft, Meta, Apple, and Tesla – which are set to release quarterly earnings reports later this week.

Global market uncertainty also contributed to the day’s volatility. A trade war between the US and Colombia was narrowly averted on Sunday, easing some geopolitical tensions. The Federal Reserve’s interest rate decision on Wednesday and the release of December’s personal consumption expenditures data on Friday are additional factors influencing market sentiment.

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