U.S. Stock Futures Plunge as Chinese AI Startup Challenges Tech Giants

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U.S. stock futures fell sharply on Monday morning as investors reacted to news from the Chinese artificial intelligence startup DeepSeek, which unveiled a chatbot rivaling those from OpenAI and Google at a significantly lower cost. The S&P 500 futures dropped by 2.3%, while the technology-heavy Nasdaq experienced a 3.9% decline. Futures for the Dow Jones Industrial Average fell by 0.8%.

Major technology companies that had previously thrived amidst the AI boom faced severe sell-offs, with Nvidia and Broadcom each losing approximately 12% of their value. Oracle saw an 8% drop, Microsoft fell over 6%, and Amazon was down 4.5%. Other tech giants including Alphabet (Google's parent company) and Meta (Facebook) each saw declines of around 3.5%.

Analyst Dan Ives from Wedbush Securities noted that despite DeepSeek's impressive technology, the U.S. tech sector remains significantly ahead of China in terms of AI infrastructure, suggesting that competitive models are easier to create than comprehensive AI systems.

In broader markets, European indices felt the impact as well, with Germany's DAX down 1.1% and the CAC 40 in Paris shedding 0.8%. Meanwhile, in Asia, Hong Kong's Hang Seng index gained 0.7%, while the Shanghai Composite index saw a slight decline of 0.1% following a report indicating a drop in China's export orders.

The Federal Reserve's upcoming policy meeting will be closely watched, as traders currently expect no cuts to the main interest rate despite recent weaker economic data.

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