Tech Shares Attempt to Claw Back Losses After a Historic Plunge

As the market opened on Tuesday, tech shares attempted to claw back losses after a historic plunge on Monday. The S&P 500 was down 1.6% in morning trading, with big tech stocks seeing some of the biggest losses, including Nvidia down 11.2%, which dragged the Nasdaq composite down 2.7% (Associated Press, Jan. 27, 2025). The Dow Jones Industrial Average held up better, with a dip of 0.3% (Associated Press, Jan. 27, 2025).

The dramatic downturn was led by Nvidia, which saw a record-breaking single-day market drop of nearly 17%, eroding about $589 billion of its value. Other tech giants, including Apple, Alphabet, and Microsoft, also experienced significant losses, underscoring the disruptive impact of DeepSeek's recent entry into the market.

DeepSeek, a new AI startup from China, introduced technology causing a $1 trillion decrease in market value for leading tech companies like Nvidia, Microsoft, and Tesla, New York Post reported. The company's AI chatbot, developed with less than $6 million and requiring fewer resources and less energy than existing Western models, challenged the cost-efficiency of US tech firm expenditures in AI.

Industry reactions to DeepSeek's market entry have been diverse. Marc Andreessen, a prominent tech investor, named the situation "AI’s Sputnik moment." Conversely, President Donald Trump hailed DeepSeek's emergence as a crucial wakeup call for American industries, urging them to intensify their focus on competing effectively. Anthony Esposito, CEO of Island Capital Investments, stressed the severe impact of DeepSeek on U.S. markets, remarking, "DeepSeek's announcement acted like a financial Scud missile aimed at the US market. Unfortunately, I see more downside to come in the coming months."

While some analysts remain skeptical of DeepSeek's long-term impact, the initial market reaction has been significant. The S&P 500 was down 1.6% in morning trading, with big tech stocks seeing some of the biggest losses, including Nvidia down 11.2%, which dragged the Nasdaq composite down 2.7% (Associated Press, Jan. 27, 2025). The Dow Jones Industrial Average held up better, with a dip of 0.3% (Associated Press, Jan. 27, 2025).



In conclusion, tech shares attempted to claw back losses after a historic plunge on Monday, led by Nvidia's record-breaking single-day market drop. DeepSeek's entrance into the AI market has profoundly disturbed the valuation of US tech giants, shedding light on both competitive weaknesses and market vulnerabilities. While some see this as a critical juncture to reassess and fortify US tech advancements, others view the developments as indicative of broader dynamics reshaping the global tech landscape.