{"id":73245,"date":"2026-10-19T09:38:15","date_gmt":"2026-10-19T13:38:15","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/us-restricts-chinese-ai-as-amazon-challenges-nvidia-and-defense-stocks-slide\/73245\/"},"modified":"2026-10-19T09:38:15","modified_gmt":"2026-10-19T13:38:15","slug":"us-restricts-chinese-ai-as-amazon-challenges-nvidia-and-defense-stocks-slide","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/us-restricts-chinese-ai-as-amazon-challenges-nvidia-and-defense-stocks-slide\/73245\/","title":{"rendered":"US Restricts Chinese AI as Amazon Challenges Nvidia and Defense Stocks Slide"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>US Department of Homeland Security<\/strong> has ordered the immediate removal of <strong>DeepSeek<\/strong> products from all federal civilian IT systems, citing national security and data privacy risks.<\/li>\n<li><strong>Amazon (<a href=\"\/stock\/AMZN\">AMZN<\/a>)<\/strong> launched <strong>TorchNeuron<\/strong>, a tool allowing developers to run <strong>PyTorch<\/strong> code on <strong>AWS Trainium<\/strong> chips without modification, directly challenging <strong><a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a>\u2019s (<a href=\"\/stock\/NVDA\">NVDA<\/a>)<\/strong> software dominance.<\/li>\n<li><strong>US defense stocks<\/strong> are experiencing a significant sell-off, with the <strong>iShares US Aerospace &amp; Defense ETF<\/strong> falling <strong>16%<\/strong> since July as investors price in a potential Democratic sweep in the upcoming midterm elections.<\/li>\n<li><strong>Uzbekistan and the US<\/strong> have solidified a massive economic partnership, with recent agreements reaching <strong>$12 billion<\/strong> in value, including an <strong>$8.5 billion<\/strong> deal for <strong>Boeing (<a href=\"\/stock\/BA\">BA<\/a>)<\/strong> aircraft.<\/li>\n<li><strong>China\u2019s state-owned firms<\/strong> purchased <strong>114,000 tons<\/strong> of US soybeans, part of a larger <strong>1.3 million ton<\/strong> buying spree following the recent Trump-Xi summit.<\/li>\n<\/ul>\n<h2>US Blacklists DeepSeek Amid Broad AI Security Crackdown<\/h2>\n<p>The <strong>U.S. Homeland Security Department<\/strong> issued a directive on Monday ordering federal civilian agencies to purge <strong>DeepSeek<\/strong> products and any third-party services utilizing the Chinese AI model from their systems. The administration&#39;s move follows reports that the model&#39;s code could potentially transmit sensitive user information to Chinese state-owned entities. This restriction mirrors the previous federal ban on <strong>TikTok<\/strong>, as Washington intensifies its efforts to wall off government infrastructure from technology developed by foreign adversaries.<\/p>\n<p>In tandem with these restrictions, <strong>Pentagon CTO Emil Michael<\/strong> warned that the government is prepared to impose strict <strong>export controls<\/strong> on domestic AI laboratories that fail to cooperate with federal safety and security protocols. Michael, a vice chair of the newly formed <strong>Super Intelligence Force (SIF)<\/strong>, emphasized that the administration will act with &quot;urgency&quot; to prevent technological advantages from reaching global competitors. The SIF has initiated a <strong>120-day review<\/strong> to establish unified standards for AI model control and accountability.<\/p>\n<h2>Amazon Targets Nvidia\u2019s Market Share with TorchNeuron<\/h2>\n<p>Amazon (<a href=\"\/stock\/AMZN\">AMZN<\/a>) has officially opened its <strong>AWS Trainium<\/strong> AI chips to all <strong>PyTorch<\/strong> developers through a new software tool called <strong>TorchNeuron<\/strong>. Historically, <strong><a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a> (<a href=\"\/stock\/NVDA\">NVDA<\/a>)<\/strong> has maintained a &quot;moat&quot; around its hardware because of its <strong>CUDA<\/strong> software, which required developers to rewrite code to run on competing chips. <strong>TorchNeuron<\/strong> eliminates this barrier by allowing PyTorch code to run on Amazon&#39;s hardware with a single configuration change, significantly lowering the cost and complexity of switching providers.<\/p>\n<p>The software is set to be open-sourced at the <strong>PyTorch Conference<\/strong> on October 20. Industry analysts view this as a strategic move to erode <a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a>&#39;s dominance in the AI training and inference market. By providing a seamless transition for the world&#39;s most popular AI coding language, Amazon aims to capture a larger share of the enterprise AI budget, which has been heavily concentrated in <a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a>&#39;s ecosystem for over a decade.<\/p>\n<h2>Defense Stocks Tumble on Midterm Election Fears<\/h2>\n<p>Shares of major defense contractors including <strong>Lockheed Martin (<a href=\"\/stock\/LMT\">LMT<\/a>)<\/strong>, <strong>Northrop Grumman (<a href=\"\/stock\/NOC\">NOC<\/a>)<\/strong>, and <strong>L3Harris (<a href=\"\/stock\/LHX\">LHX<\/a>)<\/strong> have fallen sharply as market sentiment shifts toward a potential Democratic sweep in the November midterm elections. Investors are increasingly concerned that a &quot;blue wave&quot; could lead to the cancellation or reduction of the Trump administration&#39;s proposed <strong>$500 billion<\/strong> military spending boost. The <strong>iShares US Aerospace &amp; Defense ETF<\/strong> has underperformed the broader market significantly, dropping <strong>16%<\/strong> since July while the <strong><a href=\"https:\/\/stockmarketwatch.com\/indices\/sp500\/today\" data-internallinksmanager029f6b8e52c=\"3\" title=\"snp500 today\">S&amp;P 500<\/a><\/strong> rose <strong>3.5%<\/strong>.<\/p>\n<p>The downturn reflects growing legislative uncertainty regarding high-profile procurement programs and the potential for tighter scrutiny of defense budgets. While bipartisan support remains strong for missile production and munitions, analysts suggest that a Democratic-controlled Congress would likely prioritize non-defense spending, complicating the path for the administration&#39;s goal of raising the annual defense budget from <strong>$1 trillion<\/strong> to <strong>$1.5 trillion<\/strong>.<\/p>\n<h2>Diplomatic Tensions and Trade Developments<\/h2>\n<p>In the Middle East, Iranian Foreign Minister <strong>Abbas Araghchi<\/strong> hosted Russian Foreign Minister <strong>Sergey Lavrov<\/strong> in Tehran for high-level talks aimed at preventing a &quot;large-scale war&quot; in the region. Araghchi reiterated that regional issues should be resolved through diplomacy but held the <strong>United States<\/strong> responsible for continued insecurity in the <strong>Strait of Hormuz<\/strong>. Despite these tensions, global trade continues in other sectors, with <strong>China<\/strong> purchasing <strong>114,000 tons<\/strong> of US soybeans on Monday, bringing their total weekly acquisitions to approximately <strong>1.3 million tons<\/strong> as they work toward a <strong>25 million-ton<\/strong> annual target.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways US Department of Homeland Security has ordered the immediate removal of DeepSeek products from all federal civilian IT 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