US technology stocks fell on Monday after Chinese AI startup DeepSeek raised doubts about America’s leadership in the industry. This led to a drop in shares of several chipmakers, with Nvidia, one of the world’s most valuable companies, falling more than 12% in pre-market trading.

As of 6:27:29 AM EST, Nvidia shares were trading 12% lower at $125.05 in the pre-market trading as against its previous close of $142.62. If the fall sustains when the market opens for normal trading, it could result in a $432 billion erosion from Nvidia’s market capitalisation. 

Apart from Nvidia, Netherlands-based chip companies ASML and ASM International dropped between 10-14% in European trading.

Nvidia, which designs semiconductors for AI, and ASML, which manufactures machines to produce high-end chips, have both benefited from the boom in AI spending.

But the latest AI model DeepSeek, released last week, is being viewed as a strong competitor to those from OpenAI and Meta Platforms Inc as it is cheaper to run and works on less advanced chips. Reportedly, the DeepSeek-V3 model was developed by spending $5.6 million, significantly lower than the amounts used by the American tech giants. The open-sourced product has moved to the top in Apple Inc.’s App Store rankings, according to a Reuters report.

US Stocks Crash

Major tech companies such as Microsoft and Meta Platforms also faced a downfall, shedding over 3% each. Meanwhile, Google’s parent firm Alphabet lost 3% and Apple 1.5%. Microsoft, Meta and Apple are slated to post their quarterly earnings this week.

Meanwhile, US stock futures signalled at a gap-down start for Wall Street, with Dow E-minis and S&P 500 E-minis declining nearly 2% and the tech-heavy Nasdaq 100 E-minis crashing over 3%.

(With inputs from agencies)

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