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Tech Stocks Slide as DeepSeek AI Challenges Industry Valuations
Market Volatility Driven by DeepSeek’s AI Model Disruption
U.S. stocks are heading for a significant decline on Monday, led by a sharp drop in technology shares. The volatility comes as investors react to surging interest in DeepSeek, a Chinese AI startup that has raised questions about the high valuations of major tech companies. DeepSeek’s use of low-cost chips and less data challenges the broader market belief that AI-driven demand will continue to support tech stock prices.
DeepSeek Challenges AI Market Dynamics
DeepSeek has made waves by overtaking ChatGPT to become the top-rated free app on Apple’s App Store in the United States. The startup claims it can deliver similar AI capabilities at a fraction of the cost, undercutting the market’s bullish bet on the AI sector. This development has sparked concerns about the future growth prospects of AI-focused companies, such as Nvidia, whose stock has seen a dramatic rise of over 800% since early 2023.
Global Market Reactions to Growing Uncertainty
The tech sector’s turmoil has had a ripple effect across global markets. Futures for the Nasdaq 100 and S&P 500 are both down sharply, and the CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge,” has surged to its highest level since December 20.
As stock prices fall, safe-haven assets have seen increased demand. U.S. government bonds are rising, and currencies such as the yen and Swiss franc are gaining as investors move to safer options. The U.S. dollar has also weakened, dropping 1.2% against the yen and 0.9% against the Swiss franc.
Concerns Over U.S. Trade Policy Add to Market Fears
Trade tensions between the U.S. and its key trading partners are intensifying. U.S. President Donald Trump is set to introduce additional tariffs on China, Mexico, and Canada by February 1, adding further uncertainty to the global economic outlook. While tariffs have already caused disruptions, the threat of new levies is creating a volatile environment for investors.
Commodities and Cryptocurrencies Reflect Market Uncertainty
In the commodities market, oil prices are slipping as Trump urges OPEC to reduce oil prices. Brent crude and U.S. West Texas Intermediate crude both fell by about 0.6%. Gold also saw a 0.5% drop, trading at $2,755 per ounce.
Meanwhile, cryptocurrencies are facing a decline, with Bitcoin slumping more than 4%, falling below $100,000 before bouncing back to trade at $100,500.
A Busy Week Ahead for Global Markets
Monday’s market instability kicks off a crucial week with key central bank meetings, including the Federal Reserve and the European Central Bank, which will set interest rates. Investors are watching closely for any signals that could help guide the direction of the markets amid growing global economic uncertainty.
“Tech Stocks Slide as DeepSeek AI Challenges Industry Valuations” “Tech Stocks Slide as DeepSeek AI Challenges Industry Valuations” “Tech Stocks Slide as DeepSeek AI Challenges Industry Valuations” “Tech Stocks Slide as DeepSeek AI Challenges Industry Valuations”