Investors dumped technology stocks in premarket trading Monday, sending U.S. indexes sharply lower after Chinese artificial intelligence startup DeepSeek demonstrated a chatbot that it says rivals the top versions from OpenAI and Google for a fraction of the cost, the Associated Press reports.
Futures for the S&P 500 sank 2.3% before the bell, while futures for the technology-heavy Nasdaq tumbled 3.9%. Futures for the Dow Jones Industrial Average declined 0.8%.
The same tech companies that have benefited from the AI frenzy in the past year were getting pummeled before markets even officially opened on Monday.
Chipmakers Nvidia and Broadcom both lost around 12%, while software giant Oracle lost 8%. Microsoft slid more than 6%, and Amazon was down 4.5%. Google parent company Alphabet and Facebook parent Meta each lost about 3.5%.
Analyst Dan Ives of Wedbush Securities said that while the DeepSeek AI technology is impressive, the U.S. tech sector is still far ahead of China with regard to AI infrastructure.
In other news, the Federal Reserve holds its latest policy meeting later this week. Traders don’t expect recent weak data to push the Fed to cut its main interest rate. They’re virtually certain the central bank will hold steady, according to data from CME Group.
The U.S. dollar was steady against the Japanese yen, at 155.45 yen, down from 155.72.
