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US tech stocks plunge on China AI’s unexpectedly strong showing
Unclear whether panic selling and sentiment are an overreaction or indication that Silicon Valley has underestimated Chinese tech prowess
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The US markets got a loud wake-up call on Monday when shares of major US artificial intelligence and semiconductor companies slumped on a wave of fear that Chinese companies were poised to surpass them in the high-stakes battle for supremacy.
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Analysts were divided on whether the panic selling and sentiment behind it were an overreaction or an indication that Silicon Valley had underestimated Chinese tech prowess and its ability to circumvent America’s many export bans and restrictions.
The catalyst was Chinese AI start-up DeepSeek’s strong showing over the weekend when it overtook OpenAI’s ChatGPT as the most-downloaded free app in the US on Apple’s App Store.
American semiconductor giant Nvidia’s stock price, for instance, was down as much as 25 per cent on Monday before closing at US$118.58, down 16.8 per cent, erasing hundreds of billions of US dollars in market value.
Broadcom, Micron Tech, Oracle, Microsoft and Alphabet, Google’s parent company, were among the tech firms also seeing losses in Monday trading.
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The shock registered more broadly, with the tech-heavy Nasdaq Composite Index down throughout the trading day, closing at 19,341.8, down 3.07 per cent, while the S&P 500 was off 1.46 per cent.
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