Nvidia share price: DeepSeek makes a deep $600 bn cut in AI chip-maker's market cap, pushes it behind Apple, Microsofthttps://t.co/AeoMzm8bos
— ET NOW (@ETNOWlive) January 28, 2025
U.S. stock futures edged higher early Tuesday after a sharp sell-off on Monday sparked by concerns over Chinese startup DeepSeek and its implications for the artificial intelligence sector. S&P 500 futures rose 0.2%, while Nasdaq futures added 0.3% and Dow Jones Industrial Average futures climbed 29 points. Tech shares, especially those tied to AI, attempted to recover losses in premarket trading.
Editor's Take | Big Tech selloff: DeepSeek triggers an AI ecosystem shakeup, sinking Nvidia stock.
What caused the selloff, and what does it mean for global & local markets? @nikunjdalmia explains!#BigTech #DeepSeek #Markets #AI pic.twitter.com/gij1mtTlks
— ET NOW (@ETNOWlive) January 28, 2025
Nvidia gained more than 3% after plunging nearly 17% on Monday, resulting in a market cap loss of nearly $600 billion, the largest single-day loss for a U.S. company in history. Microsoft and Alphabet also traded higher by 2.8% and 2.3%, respectively. DeepSeek intensified worries on Monday, causing the Nasdaq to lose more than 3% and the S&P 500 to slide about 1.5%.
The DeepSeek crash erased nearly $1.5tn in stock market value—an amount roughly equal to #Spain's entire GDP. pic.twitter.com/p7NB2Nn42f
— Holger Zschaepitz (@Schuldensuehner) January 27, 2025
The Chinese startup unveiled a free open-source large language model last month that cost less than $6 million to build, raising concerns about Big Tech’s massive investments in AI. The app quickly became the most downloaded free app in the U.S. Apple App Store. Seema Shah, chief global strategist at Principal Asset Management, said, “Valuations remain extended, and while vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification beyond the Magnificent Seven.
Ai-related tech stocks recover losses
The 2025 theme of U.S. exceptionalism is now facing uncertainty, with ongoing concerns around tariffs and inflation adding to market challenges.”
Investors are now focusing on corporate earnings due this week. Several major companies within the Magnificent Seven are set to report their earnings, while the Federal Reserve begins a two-day policy meeting on Tuesday.
Fed funds futures currently suggest that interest rates will remain unchanged. Inflation data due on Friday will provide further insight into the health of the U.S. economy. In other news, the U.S. Senate confirmed Scott Bessent as the U.S. Treasury secretary under President Donald Trump’s administration on Monday.
The Senate voted 68-29 to confirm Bessent, an investor and hedge-fund manager who supports a gradual 2.5% universal U.S. tariffs plan, which could go as high as 20 percent, according to the Financial Times. President Trump addressed concerns over DeepSeek on Monday evening, stating that the emergence of the Chinese AI startup should be a “wake-up call” for American industries. We need to be laser-focused on competing,” Trump emphasized, pointing to the potential for U.S. tech companies to innovate and maintain dominance.
Larry Benedict of The Opportunistic Trader said after Monday’s market sell-off, “I think this is really more of a China-U.S. issue than people think.”
Stay tuned for more updates and expert analysis throughout the day as the market continues to react to these developments.
