Nasdaq futures are down nearly 400 points in early trading on Monday, January 27, which is also reflecting in the potential gap-down start in the Nifty 50 index ahead of the January monthly expiry and the Union Budget on Saturday. One of the factors behind this steep fall is a Chinese AI startup.

The street is now concerned over DeepSeek, a Chinese AI startup, which has emerged as the No.1 free app on the iOS app store. It has also positioned itself as a free alternative to ChatGPT amidst talks of the latter’s intention to become a for-profit company.

Wall Street analysts are concerned whether DeepSeek will pop the US AI bubble. Shares like Nvidia will also be in focus due to this after a 135% rally in 2024.

DeepSeek aid that the model was built in just two months for just $5.58 million, while the CEO said that the cost of building a model was anywhere between $100 million to $1 billion.

DeepSeek was also built with fewer and inferior chips in comparison to ChatGPT, which reportedly needed 10,000 Nvidia GPUs to process its training data. On the flip side, DeepSeek engineers said that they achieved similar results with just 2,000.

The Nasdaq Futures are currently down nearly 400 points, while futures on the Dow Jones are also down close to 200 points after snapping a four-day winning streak last Friday.

The sell-off is also reflecting on the GIFT Nifty, which is down over 150 points, which implies a gap-down start for the Sensex and Nifty today.