U.S. stock futures faced significant declines on Monday, primarily influenced by the adverse performance of companies associated with artificial intelligence. Futures linked to the Dow Jones Industrial Average experienced a steep decline of 510 points, translating to a 1.14% decrease. Meanwhile, S&P and Nasdaq 100 futures diminished by 1.8% and 2.9%, respectively, as the technology sector grappled with global apprehensions over competition from Chinese AI company DeepSeek.
This week plays a crucial role for market participants seeking directional insights in the current bull market scenario, as four of the leading ‘Magnificent 7’ tech companies are poised to disclose their quarterly earnings. Tech giants Meta Platforms, Microsoft, Tesla are scheduled to report on Wednesday, followed by Apple’s announcement on Thursday.
The forthcoming financial results from these Big Tech firms are anticipated to provide clarity on the sustainability of market gains fueled by artificial intelligence. Strong earnings could revive market optimism, whereas any letdown might negatively affect the wider market, which the esteemed ‘Mag 7’ predominantly influences.
The U.S. stock market faced upheaval on Monday, spurred by the rising popularity of a low-cost Chinese artificial intelligence model that has shaken investor confidence in the profitability of the sector and its escalating appetite for advanced technology chips.
Little information is currently available about DeepSeek, a burgeoning startup based in Hangzhou. Despite its low profile, it made headlines as its AI assistant surpassed the popularity of ChatGPT to claim the top spot among free apps on Apple’s U.S. App Store.
DeepSeek revealed in a recent publication that it employed Nvidia’s less advanced H800 chips for training its DeepSeek-V3 model, which debuted on January 10. The project, completed with an expenditure below $6 million, capitalized on the modified versions of the chip originally designed to circumvent restrictions on sales to China.
The startup claims a breakthrough that may offer performance on par with ChatGPT at just a fraction of the cost—posing a potential shake-up in the AI landscape as companies assess competitive advantages and pricing strategies.
It is said that DeepSeek could offer the same performance as ChatGPT while costing 27 times lower in API pricing.
