Wall Street Suffers Major Decline Amid Concerns Over AI Disruption

The U.S. stock market experienced a significant downturn on Monday, as investors grew apprehensive about the implications of an advanced AI model from Chinese startup DeepSeek.

Technology Stocks Plunge

The decline was particularly pronounced in technology stocks. The S&P 500 plunged 1.5%, while the Nasdaq 100 plummeted 3%. NVIDIA Corporation's shares nosedived 17%, erasing $589 billion from its market capitalization – the largest single-day market loss in history.

DeepSeek and its Impact

The selloff was triggered by the surge in the popularity of DeepSeek's latest AI model on Apple's app store. Investors fear that the model's low cost and use of less-advanced chips could cast doubt on the profitability of established AI giants. This realization has sent shockwaves through the market, raising concerns about the future trajectory of the AI-driven technology sector.

Broad Market Impact

The downturn in tech stocks has had a ripple effect on the broader market. Even defensive sectors like consumer staples and healthcare experienced modest declines. Treasury yields fell as investors sought safety, while haven currencies like the yen and Swiss franc appreciated. Energy stocks, which were expected to benefit from increased AI demand, also suffered, with Constellation Energy Corporation dropping by 21%.

Market Sentiment and Outlook

The sell-off has shaken the confidence of investors who had been riding the wave of technology-fueled optimism since Donald Trump's re-election. Analysts believe that the market's valuation had become stretched, and DeepSeek's emergence has highlighted the need for diversification. While some experts remain hopeful about the long-term prospects of AI, others urge caution and advocate for exploring opportunities in undervalued sectors.