Tech stocks drop amid rise of China's DeepSeek AI model

Shares in major technology companies leading the artificial intelligence (AI) race took a tumble Monday morning amid investor concern about a new Chinese AI model with growing popularity.

Nvidia, the powerhouse chipmaker fueling the AI boom, saw its shares drop 12.6 percent from market close Friday. Fellow chipmaker Advanced Micro Devices (AMD) was also down 5 percent as of Monday morning.

Several semiconductor companies’ stock also dropped. Arm was down 8 percent, while ASML Holding dropped 7 percent and Taiwan Semiconductor Manufacturing Company (TSMC) dipped 10.3 percent.

Investors’ fears also had an impact on tech firms that have spent heavily in AI. Oracle, which is one of three companies taking the lead on the Trump administration’s new multibillion-dollar Stargate AI project, saw its shares drop 8.3 percent.

Microsoft was down 3.3 percent as of Monday morning, as was Alphabet, Google’s parent company. Amazon’s stock also fell 1.7 percent.

The investor panic follows the release of a new AI model from Chinese startup DeepSeek. The model has quickly gained popularity in recent days, rising to the top of Apple’s App Store and overtaking OpenAI’s ChatGPT.

The startup allegedly spent just $5.6 million to train its latest models, a fraction of what American AI firms have been spending to build out their own models. DeepSeek also relied on chips with reduced capabilities from Nvidia due to stringent U.S. export controls.

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