US Stock Market LIVE: Nasdaq share price crashes 5%, other tech stocks crack over 7% on DeepSeek fear

US Stock Market News LIVE: Nasdaq futures dropped 5% along with US technology stocks amid fears that a more affordable artificial intelligence model from China could challenge the dominance of US tech companies. Nvidia, a leading provider of chips for AI applications, saw a 12.3% decline in premarket trading. Other semiconductor companies, including Broadcom and Micron Technology, dropped 14.3% and 8.4%, respectively.

DeepSeek rattles AI industry

DeepSeek, which overtook the rival AI platform ChatGPT to become the top-rated free application on Apple’s App Store in the United States, says it uses lower-cost chips and less data, challenging a widespread bet in markets that AI will drive demand along a supply chain from chipmakers to data centres.

DeepSeek’s quick dominance has raised questions over Microsoft Corp., Meta Platforms Inc., and Alphabet Inc.’s hundreds of billions in planned spending on the technology. The recently launched AI model is now seen as a strong rival to those from OpenAI and Meta Platforms Inc., as it is more cost-effective and operates on less powerful chips. 

The DeepSeek-V3 model was developed with an investment of $5.6 million, a fraction of the amounts spent by the US tech giants. The open-source product has quickly risen to the top of Apple Inc.’s App Store rankings.