IXIC: Nasdaq Composite Wipes Out 3.1% as DeepSeek Sends Tech Stocks Plunging

Tech heavy index plummeted 3.1% as investors woke up to the realization that they may have overinflated tech stock valuations.

💥 Tech Stocks Pull Nasdaq Down

• The Nasdaq Composite index IXIC was hit by a tsunami of selling after a Chinese artificial intelligence startup threatened to upend America’s leadership role in the AI revolution. Technology companies shuddered after the AI startup, called DeepSeek, revealed its AI model R1, a rival to ChatGPT. The company said it is capable of pretty much the same performance as its rival, but for a fraction of the cost.
• DeepSeek said it spent just under $6 million to train its R1 model, get it to reason, make comparisons and all that good stuff. OpenAI, in contrast, blew more than $100 million to breathe the same into its most-advanced model in late 2023.

👀 Nvidia Sheds $589 Billion

• The race is on — DeepSeek is taking on OpenAI while technology companies wake up to a reality where they may have spent enormous amounts of capital to get something that’s achievable at a much lower cost. One company was hurt the most — the one that has been collecting nearly all the cash spent on AI.
• Nvidia NVDA shed 17% on Monday, losing an eye-watering $589 billion — the biggest value drop in history. With DeepSeek now around, Nvidia needs to reconsider its lofty gross margins and overall AI strategy.

🍽️ Will Traders Buy the Dip?

• Going around the room, nearly all Big Tech players got hit by Monday’s selloff. Google parent Alphabet GOOGL tanked 4%, followed by Microsoft MSFT and Tesla TSLA down more than 2% each.
• Futures contracts tied to the Nasdaq Composite were floating just above the flatline early Tuesday. Will traders use the cash session (regular trading) to buy the dip?