Stock Markets Plunge Amid DeepSeek AI Concerns

U.S. stock markets tumbled on January 27, 2025, primarily due to concerns over the competitive threat posed by DeepSeek, a Chinese AI company that has launched a low-cost AI model. Major tech stocks, including Nvidia, Meta, and Microsoft, experienced significant declines, with Nvidia's shares dropping by over 11%, reflecting fears that DeepSeek's technology could undermine their market positions. Investors are questioning the sustainability of high valuations in the tech sector, which previously thrived on AI advancements, with estimates suggesting a combined market value loss exceeding $1 trillion across U.S. tech. DeepSeek's AI assistant rapidly gained popularity, becoming the most downloaded free app on Apple's U.S. App Store, further intensifying competition in the AI landscape. Analysts are warning that this shift may lead to reduced demand for advanced chips and a reevaluation of the larger tech investment strategies. As the situation unfolds, market participants are keenly observing how these dynamics will influence the future of AI development and the fortunes of established tech giants.