Wall Street’s superstars are tumbling Monday as a competitor from China threatens to upend the artificial-intelligence frenzy they’ve been feasting on. The S&P 500 was down 1.7% in afternoon trading and heading for its worst day in more than a month. Big Tech stocks took some of the heaviest losses, with Nvidia down 16%, and they dragged the Nasdaq composite down 3.2%. Stocks outside of AI-related industries held up much better, though, and the Dow Jones Industrial Average was up 137 points, or 0.3%, as of 12:42 p.m. Eastern time. The Dow has much less of an emphasis on tech than the S&P 500 and Nasdaq. The shock to financial markets came from China, where a company called DeepSeek said it had developed a large language model that can compete with U.S. giants but at a fraction of the cost. DeepSeek had already hit the top of the chart for free apps on Apple’s App Store by Monday morning, and analysts said such a feat would be particularly impressive given how the U.S. government has restricted Chinese access to top AI chips. Skepticism, though, remains about how much DeepSeek’s announcement will ultimately shake the AI supply chain, from the chip makers making semiconductors to the utilities hoping to electrify vast data centers gobbling up computing power. “It remains to be seen if DeepSeek found a way to work around these chip restrictions rules and what chips they ultimately used as there will be many skeptics around this issue given the information is coming from China,” according to Dan Ives, an analyst with Wedbush Securities. DeepSeek’s disruption nevertheless rocked AI-related stocks worldwide. In Amsterdam, Dutch chipmaking equipment company ASML slid 7%. In Tokyo, Japan’s Softbank Group Corp. lost 8.3% to pull closer to where it was before leaping on an announcement trumpeted by the White House that it was joining a partnership to invest up to $500 billion in AI infrastructure. And on Wall Street, shares of Constellation Energy lost nearly a fifth of its value, 19.3%. The company has said it would restart the shuttered Three Mile Island nuclear power plant to supply power for data centers for Microsoft. All the worries sent investors toward bonds, which can be safer investments than any stock. The rush pushed the yield of the 10-year Treasury down to 4.54% from 4.62% late Friday. It’s a sharp turnaround for the AI winners, which had soared in recent years on hopes that all the investment pouring in would remake the global economy and deliver gargantuan profits along the way. Such stellar performances also raised criticism that their stock prices had gone too far, too fast. Before Monday’s drop, Nvidia’s stock had soared from less than $20 to more than $140 in less than two years, for example. Other Big Tech companies had also joined in the frenzy, and their stock prices had benefited too. It was just on Friday that Meta Platforms CEO Mark Zuckerberg was saying he expects his company to invest up to $65 billion this year and grow its AI teams significantly, while talking up a datacenter in Louisiana that will be so large it would cover a significant part of Manhattan. A small group of such companies has become so dominant that they’ve come to be known as the “Magnificent Seven.” […]