Chinese AI startup DeepSeek has emerged, triggering a burst in the AI stock bubble, causing Nvidia (NVDA, Financial) to plunge by 17%, leading to a significant drop in U.S. stock markets. The Nasdaq dropped as much as 749 points, closing down 612 points or 3.1%, at 19,341. The S&P 500 fell 88 points or 1.5%, closing at 6,012.
Despite the downturn, major stocks like Apple (AAPL), Johnson & Johnson (JNJ), and Travelers (TRV) each rose between 3% and 4%, lifting the Dow Jones, which opened low but closed 289 points or 0.7% higher, at 44,713. Other chip stocks also fell sharply, with Broadcom (AVGO) down more than 17% and AMD (AMD) dropping 6%.
Large tech stocks experienced declines, with Microsoft (MSFT) falling 2% and Palantir (PLTR) sliding over 4%. Nuclear energy stocks, which had seen increased demand due to the AI trend, also dropped significantly, with Constellation Energy (CEG) plunging 21%, making it the worst performer among Nasdaq components, and Vistra (VST) dropping 28%.
Some tech stocks bucked the trend, with Apple rising 3%, Meta (META) gaining nearly 2%, and Salesforce (CRM) increasing by 4%. Last December, DeepSeek released an open-source AI model reportedly outperforming OpenAI’s models in several tests, at a development cost of under $6 million.
