AI stocks fell, is this time to grab?
US STOCKS-Wall St set to open sharply lower as China's AI push rattles Big Tech
Reuters
7 minutes ago
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Wall Street's 'fear gauge' at its highest since Dec. 20
Nvidia falls after China's DeepSeek sparks AI market rout
AT&T rises on upbeat Q4 wireless subscriber growth
Futures slide: Dow 0.71%, S&P 500 2.04%, Nasdaq 3.48%
Updates prices before markets open
By Shashwat Chauhan and Sukriti Gupta
Jan 27 (Reuters) - Wall Street was set to drop at the open on Monday, as the surging popularity of a low-cost Chinese artificial intelligence model sparked a selloff in chipmaker Nvidia and other companies that stand to benefit from investments into the technology.
Chinese startup DeepSeek has rolled out a free assistant it says uses cheaper 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.
DeepSeek's AI Assistant on Monday overtook rival ChatGPT to become the top-rated free application available on Apple's App Store in the United States.
Investors are likely to question whether DeepSeek's developments have the potential to really disrupt the industry, said Adam Sarhan, CEO of 50 Park Investments.
"If it is something that can, then we have a situation where all these AI stocks and the market as a whole will be re-priced."
Nvidia NVDA.O, whose chips are the top choice for powering AI applications, dropped 11.4% in premarket trading, while industry peers Broadcom AVGO.O and Marvell Technology MRVL.O fell about 11% each.
Microsoft MSFT.O, Meta Platforms META.O and Google-parent Alphabet GOOGL.O fell between 1.8% and 3.6%.
AI server makers Dell Technologies DELL.N and Super Micro Computer SMCI.O slid 5.6% and 8.1%.
Power companies, which are expected to see a surge in demand from energy-intensive data centers needed to develop AI technology, also came under pressure. Vistra VST.N and GE Vernova GEV.N were the worst hit, tumbling more than 14%.
The Cboe Volatility Index .VIX, known as Wall Street's "fear gauge", hit its highest since Dec.20, last up 5.81 points at 20.55.
At 08:16 a.m. ET, Dow E-minis 1YMcv1 were down 316 points, or 0.71%, S&P 500 E-minis EScv1 were down 125 points, or 2.04%, and Nasdaq 100 E-minis NQcv1 were down 763 points, or 3.48%.
Bucking the wider trend, AT&T T.N rose 2.3% after its fourth-quarter wireless subscriber growth surpassed expectations.
Big Tech will remain in focus, as Microsoft, Meta, Apple AAPL.O and Tesla TSLA.O - four out of the "Magnificent 7" companies that powered the bulk of last year's gains - are set to report quarterly numbers later this week.
Global markets were also on edge as the U.S. and Colombia pulled back from the brink of a trade war on Sunday after the White House said the South American nation had agreed to accept military aircraft carrying deported migrants.
On the economic radar, the U.S. Federal Reserve's first interest rate decision of the year is expected on Wednesday, with markets widely expecting the central bank to hold its lending rate steady.
The December reading of the personal consumption expenditures (PCE) is due on Friday, a crucial metric in assessing the trajectory of inflation.
Markets have also been weighing Trump's proposed tariffs, which could exacerbate inflationary pressures and slow Fed rate cuts, after he referred to trade policy multiple times last week without providing concrete details of his plans.
All three major indexes clocked weekly gains last week despite a pullback on Friday, with the S&P 500 .SPX retreating from all-time highs.
(Reporting by Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Shounak Dasgupta and Devika Syamnath)
((Shashwat.Chauhan@thomsonreuters.com))
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
