The release of a less capital-intensive artificial intelligence model from China’s DeepSeek sent a chill through the U.S. stock market Monday, initiating a massive selloff underscoring the fragile backdrop behind the record market.

Nasdaq posted its biggest one-day percentage drop since Dec. 18 on Monday as a low-cost Chinese artificial intelligence model prompted a steep selloff in U.S. chipmakers.

The Nasdaq & S&P 500 fell after Chinese startup DeepSeek shows AI can be built cheaply, sparking fears AI spending will stall. The blue-chip Dow rose.

The sudden popularity of a Chinese artificial intelligence app called DeepSeek pummeled tech stocks and captivated Silicon Valley on Monday, prompting debate in political and tech industry circles about how the United States can maintain its lead in AI.

U.S. stocks recovered some ground on Tuesday after getting hammered by fears over China's DeepSeek AI model built on a shoestring budget.