AI Selloff Dominates Market Discussion Ahead of Fed Decision Day

The FOMC is currently meeting to discuss inflation and labor market conditions, while also monitoring the impact of AI on equities.

Key points:

• Chinese AI startup DeepSeek caused a $1 trillion decline in US and European tech stocks.
• Nvidia shares fell 17%, while Meta managed to reduce its losses after an initial drop.
• Microsoft and Alphabet experienced declines of over 2% and 4%, respectively. Siemens energy dropped 19% in Europe.
• DeepSeek claims to have trained its AI model for $5.6 million, significantly less than competitors like Anthropic and OpenAI.
• DeepSeek uses less computing power than other models, raising concerns about efficiency among US-based companies.
• Mark Zuckerberg has established teams at Meta to analyze DeepSeek's developments ahead of earnings reports.
• Biden-era GPU export restrictions are raising national security concerns and impacting chip demand.
• Nvidia shares rebounded by 7% during afternoon trading after the initial market reaction.
• Market analysts believe AI GPU demand still exceeds supply, despite the emergence of more efficient models.
• The FOMC is expected to maintain current interest rates, with potential questions regarding AI developments during the press conference.