This week, DeepSeek R1 shocked the global market, triggering a significant decline in global tech stocks.
As of the time of publication, U.S. stock futures plummeted, with Nasdaq 100 index futures down nearly 5%, S&amp;P 500 index futures down nearly 3%, and Dow futures down nearly 1%. Broadcom fell over 11%, ASML dropped nearly 11%, Advanced Micro Devices fell over 10%, TSMC dropped nearly 10%, and Micron Technology fell nearly 9%.
NVIDIA fell more than 13%. If this decline holds until the close, it will become one of the largest single-day evaporations of market value for a single company in history. Some analysts believe that the success of R1 may weaken market expectations for demand for NVIDIA's AI chips.
European tech stocks also did not escape the downturn. Chip equipment manufacturer ASML led the decline, with its stock price dropping by as much as 12%. If these losses persist until the close, the total market value of the Nasdaq 100 index and the European Stoxx 600 technology sub-index could evaporate by as much as $1.2 trillion.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c55ed219-7b9a-4021-8d91-a2f089aebd0e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c55ed219-7b9a-4021-8d91-a2f089aebd0e.png"/>
The DeepSeek team completed the training of the new model with only about $6 million and approximately 2,000 NVIDIA dedicated chips, both the funding and chip usage scale are far below that of the world's leading AI companies. This raises questions about the high valuations of American tech giants represented by NVIDIA.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8bdbfa4c-7991-4f3b-b905-6437cb441c6f.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8bdbfa4c-7991-4f3b-b905-6437cb441c6f.png"/>
<h2>DeepSeek R1 Shocks the Market: Are the Valuations of American Tech Giants Sustainable?</h2>
DeepSeek R1 is considered capable of competing with the latest products from OpenAI and Meta Platforms. Notable investor Marc Andreessen praised it as &#34;one of the most stunning and impressive breakthroughs.&#34;
DeepSeek's application can demonstrate its working process and reasoning logic when answering user queries, a transparency feature that has received widespread acclaim from users. The product quickly topped the Apple App Store charts after its release last week.
Vey-Sern Ling, Managing Director of Union Bancaire Privee, stated:
<blockquote>
&#34;DeepSeek shows that it is possible to develop powerful AI models at a lower cost. This could disrupt the investment case for the entire AI supply chain, which is currently driven by the high spending of a few mega-scale companies.&#34;
</blockquote>
This development has also raised concerns about the high valuations of American tech companies. The current expected price-to-earnings ratio of the Nasdaq 100 index is 27 times, higher than the average of 24 times over the past three years. NVIDIA's price-to-earnings ratio is 33 times, slightly below its three-year average
At the same time, Chinese AI-related stocks reacted positively. Companies like Merit Interactive, which have a clear connection to DeepSeek, saw their stock prices hit the daily limit. The Hang Seng Tech Index rose 2% during the session.
Charu Chanana, Chief Investment Strategist at Saxo Markets, pointed out that while the current leaders like NVIDIA have a solid position, this reminds us that dominance in the AI field is not unassailable:
<blockquote>
&#34;The rise of China's DeepSeek indicates that competition is intensifying, and future competitors will evolve faster and challenge established companies.&#34;
</blockquote>

NVDA

The success of DeepSeek R1 has triggered a massive market shock, with NVIDIA falling over 13% in pre-market trading and ASML down 12%. If these losses persist until the close, the total market capitalization of the Nasdaq 100 Index and the European Stoxx 600 Technology Sub-index could evaporate by as much as $1.2 trillion, making NVIDIA one of the largest single-day market value declines in history

- This week, the launch of DeepSeek R1 caused a significant drop in global tech stocks, with Nasdaq 100 futures falling nearly 5%.  
- The success of DeepSeek, which trained its model for about $6 million using 2,000 Nvidia chips, raises questions about the sustainability of high valuations for major U.S. tech companies.  
- The development has sparked concerns over the overvaluation of U.S. tech firms, while Chinese AI-related stocks, linked to DeepSeek, saw positive market reactions.

Wallstreetcn

NVIDIA

Suochen

DeepSeek

XI2CSOPHSTECH

SENSETIME-W

HSTECH ETF

Super Micro Computer

VanEck Semiconductor ETF

Apple

Taiwan Semiconductor

Direxion FTSE China Bear 3X

CSOP HS TECH

IFLYTEK

GraniteShares 2x Long NVDA Daily ETF

OpenAI

Direxion FTSE China Bull 3X

Huatai-PB CSOP Hang Seng Technology ETF(QDII)

ASML

Micron Tech

Destiny Tech100

Skychem Technology

Direxion Semicon Bull 3X

YieldMax NVDA Option Income Strategy ETF

Hang Seng TECH Index

Tongxing

Broadcom

XL2CSOPHSTECH

DeepSeek strikes Wall Street, with the market value of US and European tech stocks potentially evaporating by $1.2 trillion