Wall Street took a significant hit on January 27, with Big Tech stocks leading the downturn amid concerns about a potential AI competitor from China. The Nasdaq composite plunged 3.1%, weighed down by Nvidia’s staggering 16% drop. Nvidia, a key supplier of AI chips, saw its stock fall 12.3% in premarket trading as investors reacted to the rise of DeepSeek—a low-cost, Chinese AI model disrupting the market. DeepSeek has quickly become the top-rated free app on Apple’s App Store in the US, overtaking competitors like ChatGPT. What sets it apart is its ability to deliver robust AI capabilities using lower-cost chips and significantly less data. Developed with an investment of just $5.6 million, the DeepSeek-V3 model challenges the massive spending strategies of US tech giants like Microsoft, Meta, and Alphabet, all of whom have committed billions to AI research and infrastructure. This sudden shake-up raises concerns about the sustainability of heavy AI investments, as DeepSeek’s cost-efficient model could upend the anticipated dominance of US tech firms. The potential for reduced demand along the AI supply chain rattled chipmakers and data center providers alike. The ripple effects extended to European markets, where the pan-European STOXX 600 index fell 0.8%, with tech stocks dropping 3.4%—marking their largest single-day decline since October. Semiconductor firms like ASML and ASM International took heavy hits, sliding 7% and 12%, respectively. Siemens Energy and Schneider Electric, both suppliers of hardware for AI infrastructure, saw their shares plunge 19.9% and 9.5%.