AI Rout Triggers Sharp Drop in US Stocks as Nvidia Slumps 16%

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Wall Street’s AI Fever Meets a Cold Reality

The AI‑driven rally that had propelled U.S. equities to new highs unraveled on Tuesday, as a sudden slump in Chinese AI startup DeepSeek sparked a market‑wide retreat. The Nasdaq slipped 2%, while Nvidia, the sector’s flagship, tumbled 16%, dragging a swath of AI‑heavy infrastructure stocks into the red.

Key Takeaways

A sharp price decline in DeepSeek acted as the catalyst for a broad AI‑related sell‑off.
The Nasdaq Composite fell 2% amid heightened risk aversion.
Nvidia’s shares plunged 16%, marking the steepest single‑day drop for the chip maker this year.
Investors are re‑evaluating exposure to firms heavily weighted toward AI infrastructure and computing.
Market analysts warn that volatility could persist as valuations across the AI ecosystem come under scrutiny.