Major US tech stocks — including Nvidia, Microsoft and Tesla — suffered a stunning $1 trillion rout on Monday as fears over an advanced Chinese artificial intelligence model triggered hysteria from Wall Street to Silicon Valley.

Chipmaker Nvidia, which rode the AI wave last year to become the richest company in the world, plunged nearly 17% — erasing $589 billion in value in the largest one-day drop in market history — as investors learned about DeepSeek, a China-based startup launched just last month.

DeepSeek’s launch — referred to by tech investor Marc Andreessen as “AI’s Sputnik moment” — triggered a global meltdown that slammed AI firms and chipmakers. 

President Trump said he views DeepSeek as “a positive” and “wakeup call for our industries that we need to be laser focused on competing to win.”

The firm claims to have developed the advanced AI chatbot at a cost of under $6 million — and without access to Nvidia’s best computer chips. That’s a stark contrast to the billions of dollars typically spent by Western tech giants on AI research and chips.

If true, it casts doubt over the thesis behind the industry’s entire supply chain and whether America actually has an advantage over its chief geopolitical rival.

“The DeepSeek announcement from China was nothing short of a financial Scud missile aimed at a US market that is much more fragile than most will admit,” said Island Capital Investments CEO Anthony Esposito, who noted that AI hype has driven markets to all-time highs.

DeepSeek’s AI chatbot — featuring a free, open-source large-language model — is as advanced as its US counterparts in terms of solving problems, while using far less energy and requiring fewer powerful computer chips than rivals developed by the likes of Google and OpenAI.

In essence, it could mean that US tech giants have wildly overspent.

Aside from Nvidia, some of the other so-called Magnificent 7 stocks — Apple, Google parent Alphabet, Tesla, Microsoft, Meta and Amazon — were also hit hard by the selloff.

Alphabet fell more than 4%, while Microsoft, which has plunged billions of dollars into Sam Altman-led OpenAI, fell more than 2%. 

Elon Musk’s Tesla sank more than 2%. 

Amazon, Mark Zuckerberg’s Meta and Apple managed to escape the carnage, each closing higher.

DeepSeek had surged to the top of the charts in Apple’s App Store as users scrambled to test out the chatbot.

The rapid progress of DeepSeek has sparked scrutiny over the immense sums being funneled into AI research by leading US firms, raising questions about efficiency and cost-effectiveness.

“DeepSeek clearly doesn’t have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive,” said Srini Pajjuri, a semiconductor analyst at Raymond James, in a note on Monday.

The upheaval occurred just days after President Trump announced a $500 billion AI initiative known as Stargate.

The vast sum of money being invested in the project, which includes the involvement of OpenAI, Oracle and SoftBank, is tied to an unprecedented buildout of data centers and computer chips necessary to power advanced AI.

Nvidia downplayed the risk to its business in a statement, calling DeepSeek an “excellent AI advancement” and noting that its chips were still essential for running AI models.

Despite the market panic, Wedbush’s Dan Ives, a bullish tech industry analyst, said DeepSeek is a “minimal threat to the AI revolution thesis” and represents a “buying opportunity” for slumping stocks like Nvidia.