AI Rout Sends U.S. Stocks Tumbling as DeepSeek Sparks Panic

U.S. equities slipped early Tuesday as an AI rout ignited by China’s DeepSeek announcement rattled AI‑related valuations. The Nasdaq Composite led losses, with AI infrastructure firms plunging into double‑digit declines.

AI rout triggers broad market sell‑off

Nvidia posted a ↓ 16% slide, while the S&P 500 closed ↓ 1.1%. The Dow Jones Industrial Average ended down 1.2%. Analysts at Reuters linked the tumble to heightened competitive pressure from Chinese AI startups, noting DeepSeek’s recent model release as a catalyst.

“The market is re‑pricing the risk that China could close the AI hardware gap,” said a senior strategist at Bloomberg.

Momentum indicators turned negative, and trading volume surged above average, suggesting short‑term capitulation rather than a structural shift. Investors should watch upcoming earnings from AI chip makers for stabilization signals.

Dispatch from Darius Flint (Tactical & Emergency Desk Reporter).