Nvidia, TSMC, ASML Among Tech Stocks Sinking on DeepSeek Threat

A slew of artificial intelligence stocks, including chip maker Nvidia (NVDA), are tumbling in premarket trading Monday after Chinese startup DeepSeek released a cutting-edge AI model that runs on less-advanced chips and at a lower cost than U.S. rivals like OpenAI.

The Chinese company’s launch is raising questions about tech shares being overvalued and that Big Tech is overspending on their AI buildout. DeepSeek’s app was a top downloaded program on the Apple store in the U.S. Monday morning.

Earlier this month, DeepSeek said its performance was “on par with ChatGPT.” DeepSeek’s success has come despite U.S. export controls on cutting-edge chips that have hampered Chinese AI companies.

Nvidia was falling 11% premarket Monday morning, while U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) were down more than 11% and ASML Holding (ASML), the Dutch company that makes semiconductor-making machinery, were falling around 7%. Other chipmakers were also hit: Broadcom’s (AVGO) shares are slumping around 12%, while Micron Technology (MU) is down around 6%.

Nasdaq futures are falling around 4%. Meta Platforms (META), which reports results Wednesday, is down almost 4%. Even the nuclear power providers that had been seen as essential to powering AI data centers are slumping: Constellation Energy (CEG) and Vistra (VST) are down around 11%.

Citi Sticks With Nvidia Buy Call 

Still, in a note released Jan. 26, Citi analysts said they were sticking with a buy rating on Nvidia, and expected AI companies to continue buying advanced chips.

“While DeepSeek’s achievement could be groundbreaking, we question the notion that its feats were done without the use of advanced GPUs to fine tune it and/or build the underlying [large language model] the final model is based on through the Distillation technique,” the analysts wrote, noting that “while the dominance of the US companies on the most advanced AI models could be potentially challenged.”

American firms’ access to cutting-edge chips will be an advantage “in an inevitably more restrictive environment,” the analysts wrote.