Nasdaq futures tank, Dow tumbles 350 points as AI fears rock tech stocks

January 27, 2025

0 2 minutes read

Nasdaq futures plunged on Monday to lead a stock rout on Wall Street as a Chinese startup rattled faith in US leadership and profitability in AI, taking a hammer to Nvidia (NVDA) and other Big Tech stocks.

Contracts on the tech-heavy Nasdaq 100 (NQ=F) sank nearly 4%, while S&P 500 futures (ES=F) tumbled over 2%. Dow Jones Industrial Average futures (YM=F) fell 0.9%, or about 380 points, on the heels of a winning week for the major gauges.

Markets have been rattled by claims by China’s DeepSeek that its AI assistant uses cheaper chips and less data than leading models, but performs equally well. A surge in DeepSeek’s popularity has spurred a scramble by investors to reassess bets that AI demand-driven growth will keep fueling gains for stocks.

AI bellwether Nvidia’s shares tumbled over 11% in pre-market trading, as chip-related names took a bruising. ASML lost 9%, while Arm (ARM), Broadcom (AVGO), and Micron Technology (MU) also got hammered.

Shares of Meta (META) and Microsoft (MSFT) both slid about 6% amid worries about megacaps’ hefty investment in AI. Tesla (TSLA) and Amazon (AMZN) also lost ground as techs sold off across the board.

Big Tech earnings season kicks off this week, highlighted by results from Apple (AAPL), Tesla, Meta, and Microsoft. Eyes will be on guidance for future profit as DeepSeek casts doubt on prospects for revenue.

Investors started to flock to assets seen as safe as stocks plunged. The 10-year Treasury yield (^TNX) fell as much as 12 basis points to 4.50%, the lowest level in over a month, while haven currencies including the yen and the Swiss franc surged.

In the background, trade war concerns revived during a face-off between President Donald Trump and Colombia over the weekend. Trump threatened to impose 25% tariffs on the country’s goods in a row over deported migrants before putting the duties on pause after a deal was reached.

The dispute underlined concerns that Trump won’t hold back on turning to tariffs as a way to push through a range of policy aims.

The Federal Reserve will hold its first policy meeting of 2025 this week, with officials are already on watch for quick-fire moves by Trump that could pose challenges to the central bank. The president has called for the Fed to lower interest rates, signaling a coming clash with policymakers, who begin their two-day gathering on Tuesday.

LIVE 2 updates

Good morning. Here’s what’s happening today.
Eyes on Nvidia rout

Nvidia (NVDA) is getting pummeled pre-market by 10% on fears around China-based OpenAI rival DeepSeek. The concern? DeepSeek reportedly developed its powerful new large language model using far fewer advanced chips than US rivals are using.

I’ll have more to say on this on the Opening Bid podcast episode dropping on Yahoo Finance this morning. But the reaction sure seems overdone.

The notion that Meta (META) is suddenly going to reverse its billions of dollars being spent on AI infrastructure — powered by Nvidia chips — seems far-fetched. Further, can one even trust the claims by DeepSeek? And lastly, DeepSeek’s alleged advances are unlikely to alter the demand backdrop for Nvidia this year — if at all.

Good to really question this type of news thoroughly.