Shares in Nvidia, whose semiconductors power the AI industry, fell nearly 17 percent on Wall Street, erasing nearly $600 billion of its market value.

Major AI players, including Nvidia, Meta, Microsoft, and Alphabet, saw significant losses, with Nvidia shedding over 11% and losing $400 billion in market value. Analysts highlighted China’s growing challenge to US tech dominance.

The S&P 500 was down 1.6% in morning trading. Big Tech stocks took some of the heaviest losses, with Nvidia down 11.2%, and they dragged the Nasdaq composite down 2.7%. The Dow Jones Industrial Average, which has less of an emphasis on tech, was holding up better with a dip of 123 points, or 0.3%, as of 9:50 a.m. Eastern time.

U.S. indexes were sent sharply lower after Chinese artificial intelligence startup DeepSeek demonstrated a chatbot that it says rivals the top versions from OpenAI and Google for a fraction of the cost.

Chinese startup DeepSeek has rolled out a free assistant it says uses lower-cost chips and less data, seemingly challenging a widespread bet in financial markets that AI will drive demand along a supply chain from chipmakers to data centers.

The Lunar New Year holiday, China’s most important festival, begins today and runs until Tuesday next week. Millions of Chinese leave the cities to travel back home for a rare break with family during the holidays, which tend to distort economic data early in the year.

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President Donald Trump ordered the creation of a digital asset working group on Thursday which, among other things, would be tasked with exploring a U.S. cryptocurrency stockpile.

DeepSeek has produced an open-source AI model that could rival ChatGPT while being significantly cheaper to produce.

Beijing contends with a weakening yuan while awaiting policy clues from the incoming Donald Trump’s administration.

The Dow Jones Industrial Average rose 291.54 points, or 0.67 per cent, to 44,715.79. Read more at straitstimes.com.

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