The Invesco QQQ Trust ETF is experiencing significant pressure due to a confluence of factors impacting the technology sector. The emergence of DeepSeek, a Chinese AI startup, has sent shockwaves through the market, challenging the dominance of major U.S. tech firms. DeepSeek's cost-effective AI model, which uses less powerful chips, has raised concerns about the sustainability of massive AI investments by U.S. tech giants. This development has led to a broad sell-off in tech stocks, with investors reassessing the valuations of companies heavily invested in AI development. The market is also bracing for earnings reports from major tech firms, which are expected to show a slowdown in growth, further contributing to the risk-off sentiment.
Adding to the market's unease, the Nasdaq 100 futures dropped sharply, reflecting investor anxiety over the potential disruption to the AI chip supply chain. Nvidia, a key player in the AI chip market, saw its shares plunge significantly, exacerbating the sell-off. The broader tech sector, including companies like Microsoft, Amazon, and Meta, also faced substantial losses as investors reevaluated the scale of AI spending in light of DeepSeek's advancements. This tech-driven downturn is occurring amidst a backdrop of mixed economic signals and upcoming central bank decisions, adding to the market's volatility.
The Invesco QQQ Trust ETF fell to $515.95, down 2.58% as of 10:00 AM ET on January 27th.