Semiconductor Slump: AI Chip Competition Sends Nasdaq Tumbling

The Nasdaq experienced a decline of over 1% due to falling semiconductor stocks, including Nvidia, amidst skepticism about the AI-driven rally. Chinese startup DeepSeek's push to develop an AI chip contributed to the downturn. The Philadelphia SE Semiconductor index saw significant losses, with concerns around the AI infrastructure spend.

The Nasdaq Composite fell significantly on Tuesday, influenced by a selloff in semiconductor stocks such as Nvidia. Questions about the sustainability of the AI-driven rally added to the market's downturn, alongside a report about China's DeepSeek developing its AI chip.

Nvidia's shares dropped by 0.7% following news that DeepSeek aims to create an AI chip, potentially reducing reliance on Nvidia. This led to a global decline in chip stocks even as Korea's Samsung Electronics announced a substantial profit increase.

The Philadelphia SE Semiconductor index saw a steep fall, risking a substantial market value loss. Market players are skeptical about the ROI from heavy investments in AI infrastructure despite expectations of significant spending from hyperscalers.