AI Rout Triggers Broad Stock Sell‑off as DeepSeek Sparks Fear

AI rout shakes Wall Street

The U.S. equity market opened lower on Tuesday, with the Nasdaq bearing the brunt as AI‑related infrastructure firms tumbled. Nvidia slumped ↓ 16%, while peers in the semiconductor and cloud sectors recorded double‑digit retreats. The sell‑off was ignited by a sharp correction in Chinese AI startup DeepSeek, prompting investors to reassess exposure to the sector’s lofty valuations.Market sentiment turned decidedly bearish within minutes, echoing patterns seen after the 2020 pandemic‑driven volatility spikes. According to Reuters, the Nasdaq Composite fell ↓ 1.2% as algorithmic trading amplified the downturn.

“The AI hype cycle is encountering its first major correction,” said a senior analyst at a leading brokerage.

Investors are now weighing whether the pullback signals a temporary pause or the start of a broader re‑rating of AI‑centric equities.