DeepSeek's AI Breakthrough Shakes Global Tech Markets

DeepSeek shakes up stocks as traders fear for US tech leadership

DeepSeek, a Chinese AI startup, has unveiled a cost-effective AI model that runs on less advanced chips, challenging the dominance of major tech players like Nvidia. This new development has caused a significant drop in global tech stocks, raising doubts about the high valuations of AI-driven companies.Chinese artificial intelligence startup DeepSeek rocked global technology stocks Monday, raising questions over America's technological dominance. Buzz grew over the weekend about DeepSeek's latest AI model being cost-effective while running on less-advanced chips, casting doubt on the validity of the sky-high valuations for companies like Nvidia Corp. Nvidia has led the global AI stock boom as its chips have been seen as essential to the technology. Nasdaq 100 futures tumbled as much as 3.2%, while contracts on the S&P 500 fell 1.9% as of 3:23 a.m. in New York. In Europe, tech stocks led market losses, with shares of chip equipment maker ASML Holding NV down more than 8%. Futures contracts on the Cboe Volatility Index, or VIX, spiked higher. "DeepSeek shows that it is possible to develop powerful AI models that cost less," said Vey-Sern Ling, managing director at Union Bancaire Privee. "It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers." The AI model from DeepSeek -- founded by quant fund chief Liang Wenfeng -- is widely seen as competitive with OpenAI and Meta Platforms Inc.'s latest offerings. Lauded by investor Marc Andreessen as "one of the most amazing and impressive breakthroughs," DeepSeek's app shows its work and reasoning as it addresses a user's written query or prompt. Released last week, the product is now at the top of Apple Inc.'s App Store rankings, with users praising its transparency. Chinese AI-related stocks reacted positively, with mainland-listed Merit Interactive Co. among those surging by their daily limits. Merit is among those with the clearest links to DeepSeek after stating in an earlier filing that it had incorporated the homegrown AI firm's model into marketing. In Hong Kong, the Hang Seng Tech Index climbed as much as 2% ahead of Lunar New Year holidays this week. AI trades slumped elsewhere as investors rethought assumptions on computing power and energy. Nvidia shares were down over 6% on Germany's Tradegate. The DeepSeek product "is deeply problematic for the thesis that the significant capital expenditure and operating expenses that Silicon Valley has incurred is the most appropriate way to approach the AI trend,' said Nirgunan Tiruchelvam, head of consumer and internet at Singapore-based Aletheia Capital. "It calls into question the massive resources that have been dedicated to AI." The decline in Nasdaq futures comes at the start of a big week for earnings from major tech companies including Apple and Microsoft Corp. Profit growth is expected to have slowed while valuations remain inflated, once again causing concern over the large AI-driven rally in the sector. The Nasdaq 100 is trading at 27 times estimated forward earnings, compared with its three-year average of 24 times. Nvidia is at 33 times, though that's slightly down from its three-year average. The DeepSeek release raises new doubts, challenging the notion that China's AI technology is years behind US counterparts. Washington's trade restrictions had kept the most cutting-edge chips out of China's hands, but DeepSeek's model was built using open source technology that is easy to access. "While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted," said Charu Chanana, chief investment strategist at Saxo Markets. "The emergence of China's DeepSeek indicates that competition is intensifying, and although it may not pose a significant threat now, future competitors will evolve faster and challenge the established companies more quickly. Earnings this week will be a huge test."

China's DeepSeek sets off AI market rout

SINGAPORE (Reuters) - Nasdaq futures slumped and technology shares slid in Japan on Monday as surging popularity of a Chinese discount artificial intelligence model wobbled investors' faith in the profitability of AI and the sector's voracious demand for high-tech chips. Nasdaq 100 futures were down 2.4% and S&P 500 futures by the Asia afternoon, and shares in Nvidia supplier Advantest fell 8.5% in Tokyo. Startup DeepSeek has rolled out a free assistant it says uses lower-cost chips and less data, seemingly challenging a widespread bet in financial markets that AI will drive demand along a supply chain from chipmakers to data centres. "It's a case of a crowded trade, and now DeepSeek is giving a reason for investors and traders to unwind," said Wong Kok Hoong, head of equity sales trading at Maybank. AI-focused startup investor SoftBank Group slid more than 8%, on course for its biggest one-day fall since Sept. 30. Last week it announced a $19 billion commitment to fund Stargate, a data-centre joint venture with OpenAI. Chip-making equipment giant Tokyo Electron fell 5%. Tech-heavy markets in Taiwan and South Korea were closed. European tech stocks, especially Dutch computer chip equipment maker ASML, which counts Taiwan's TSMC, Intel and Samsung as its customers, will likely face pressure at the open. Shares of Nvidia, the poster child of AI, have risen 196% since the start of 2024, outperforming the 35% gain in the Nasdaq. CAPEX IN QUESTION Little is known about the small Hangzhou startup behind DeepSeek, but its assistant leapfrogged rival ChatGPT to become the top-rated free application on Apple's App Store in the United States on Monday. DeepSeek researchers wrote in a paper last month that the DeepSeek-V3 model, launched on Jan. 10, used Nvidia's H800 chips for training, spending less than $6 million. H800 chips are not top-of-the-line. Initially developed as a reduced-capability product to get around restrictions on sales to China, they were subsequently banned by U.S. sanctions. Besides chips, data centres and related companies also took a hit on Monday, with Malaysia's utility conglomerate YTL Power falling 7% in Kuala Lumpur to its lowest in two months. "The market is questioning the capex spend of the major tech companies," said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, noting that positioning had become crowded. To be sure, much remains unknown about the details of DeepSeek's development and the hardware it uses. "The idea that the most cutting-edge technologies in America, like Nvida and ChatGPT, are the most superior globally, there's concern that this perspective might start to change," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. "I think it might be a bit premature." Markets reaction in China was also mixed, with a CSI300 index of AI shares down 2.2% but big data stocks up 4%. (Reporting by Tom Westbrook and Ankur Banerjee in Singapore. Editing by Gerry Doyle)

Tech stocks fall as China's DeepSeek sparks U.S. worries about the AI race

NVIDIA headquarters in Santa Clara, Calif.Justin Sullivan / Getty Images file Tech stocks plunged Monday morning, as fears mounted that Chinese artificial intelligence firm DeepSeek leapfrogged U.S. dominance in AI development. The Nasdaq Composite, which tracks the country's largest tech firms, plunged 3.4% at the opening bell. The Dow fell 180 points and the S&P 500 tumbled nearly 2% The sell off was sparked by advances claimed by China's DeepSeek, which released an open-source artificial intelligence model in December, after saying that it took only two months and less than $6 million to create. Those claims would be far less than the hundreds of billions of dollars that American tech giants like OpenAI, Microsoft, Meta and others have poured into developing their own models, fueling fears that China may be passing the U.S. in the scale and efficiency of their AI investments. DeepSeek's app is now the number one free app in the Apple App Store, pushing OpenAI's ChatGPT into second place. Among the biggest losers in the stock market slump: chipmaker Nvidia, where shares plummeted more than 12%. Nvidia has been among the better performers as of late, with shares soaring more than 200% over the course of the last two years making it one of the largest companies in the world. Nvidia's drop would wipe more than $300 billion in market value off the company. Other semiconductor companies also saw major losses. Micron Technology and Arm Holdings fell 7% while ASML slid 9%. Mega-cap tech firms also felt the pain, with Microsoft and Google parent Alphabet falling 4%. Meta Platforms, which is developing its own open-source AI model, fell nearly 2%. Worries about DeepSeek's alleged advances come despite export controls on sales of advanced semiconductors to China. Constellation Energy, which inked a deal with Microsoft to restart the Three Mile Island nuclear plant to power artificial intelligence servers, sank 16%. Shares of other power companies seen as AI beneficiaries such as Vistra Energy and NRG Energy also dropped sharply. Siemens Energy, which makes equipment for utility companies, plunged 20%. GE Vernova, another maker of power equipment, fell more than 23%. Not everyone is convinced by DeepSeek's announcements. "We believe that...DeepSeek did not 'build OpenAI for $5M'", Bernstein analyst Stacy Rasgon wrote in a note to clients Monday. "The models look fantastic but we don't think they are miracles." Giuseppe Sette, a president at AI market research firm Reflexivity, said the underlying tech for DeepSeek appears to be "extremely bullish in the long-term" because it could be a playbook for other AI firms going forward. "DeepSeek has taken the market by storm by doing more with less. In layman terms, they activate only the most relevant portions of their model for each query, and that saves money and computation power. This shows that with AI the surprises will keep on coming in the next few years," Sette wrote in a note Monday.

Japan's tech stock selloff deepens as DeepSeek triggers AI rethink

Japanese technology shares declined due to the global market impact of a new, low-cost Chinese AI model by DeepSeek. Nvidia and other tech companies saw significant losses as investors reevaluated the high valuations and dominance of current AI leaders in light of this new competition.Japanese technology shares fell on Tuesday as a global market rout sparked by the emergence of a low-cost Chinese artificial intelligence model entered day two, with investors questioning the sky-high valuation and dominance of AI bellwethers. Shares of Nvidia, the poster child of the AI boom in recent years, dragged U.S. stocks lower, sinking 17% on Monday and wiping $593 billion from the chipmaker's market value, a record one-day loss for any company. It all stemmed from a free AI assistant launched by Chinese startup DeepSeek last week that the firm said uses less data at a fraction of the cost of services available currently, garnering significant attention worldwide including from OpenAI CEO Sam Altman who called it an "impressive model". "We will obviously deliver much better models and also it's legit invigorating to have a new competitor!," Altman, the head of the AI firm behind ChatGPT, said in a social media post. The launch and increasing popularity of DeepSeek spurred investors to dump tech stocks globally, with ripples felt from Tokyo to Amsterdam to Silicon Valley. In Japan, chip-testing equipment maker Advantest, a supplier to Nvidia, lost 10% on Tuesday after diving nearly 9% on Monday. Chip-making equipment maker Tokyo Electron fell 5.3%, while technology start-up investor SoftBank Group was 6% lower. Over in the U.S., Broadcom finished down 17.4%, followed by ChatGPT backer Microsoft which fell 2.1% and then Google parent Alphabet which ended down 4.2%. The Philadelphia semiconductor index tumbled 9.2%, for its deepest percentage drop since March 2020. Tech heavy South Korean and Taiwan markets are closed for Lunar New Year. The selloff has brought into the spotlight the crowded positioning among investors as well as the extremely high valuation of some of these firms. "What makes Monday's tech selloff so jarring is that the valuations of many of these AI and tech companies offer no margin of error," said David Bahnsen, chief investment officer at The Bahnsen Group. "The excessive weighting these tech stocks have in many investor portfolios and the high concentration these tech stocks have in the market indices was a significant and under-appreciated risk issue." The hype around AI has powered a huge flow of capital into equities in the last 18 months, inflating valuations and lifting stock markets to record highs. It is not just the chipmakers and tech companies but companies focused on datacentres also taking a hit, with Malaysia's utility conglomerate YTL Power down 7.5% on Tuesday, its third session of steep loss. Jun Rong Yeap, market strategist at IG, said there may be some "sell first, think later" thinking at play, with opinions divided on whether DeepSeek will eventually be the so-called game-changer that reshapes the U.S. AI landscape. "But if anything, market participants dislike uncertainties and are clearly unwilling to take the risks in the near term." Little is known about the Hangzhou startup behind DeepSeek, whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer, records showed. Its researchers wrote in a paper last month that DeepSeek-V3 model, launched on Jan. 10, used Nvidia's lower-capability H800 chips for training, at a cost of less than $6 million. Charu Chanana, chief investment strategist at Saxo, said the development serves as a reminder that competition in the global AI arena is intensifying and Nvidia may not be in pole position forever. "By developing cutting-edge AI models with less advanced and more cost-efficient hardware, DeepSeek challenges the heavy investments U.S. tech companies are pouring into high-cost AI infrastructure." Investor focus will now be on the flurry of tech earnings this week, with executives likely keen to calm frayed nerves.

DeepSeek Buzz Puts Tech Stocks on Track for $1.2 Trillion Drop

(Bloomberg) -- Chinese artificial intelligence startup DeepSeek's latest AI model sparked a $1 trillion rout in US and European technology stocks, as investors questioned bloated valuations for some of America's biggest companies. DeepSeek's latest AI model rose to the top of the Apple's appstore charts over the weekend, presenting a visible challenge to costlier models like OpenAI and raising questions over the hundreds of billions in planned spending on the technology by the likes of Microsoft Corp., Meta Technologies Inc. and Alphabet Inc. Subscribe to the Bloomberg Daybreak podcast on Apple, Spotify or anywhere you listen. It also put a spotlight AI chip producer Nvidia Corp., whose shares soared ninefold in the past two years, making it the highest-valued company in the world. The Santa Clara, California-based firm slid more 10% in premarket trading Monday -- a drop that would zap about $340 billion in market value if it were to hold in the cash session. Nasdaq 100 futures tumbled as much as 5.2% in overnight trading before paring the loss to 3.9% as of 7:30 a.m. in New York. That marked the biggest intraday drop for the contracts since August. In Europe, tech stocks led market losses, with shares of chip equipment maker ASML Holding NV down as much as 12%. The Cboe Volatility Index, known as the VIX, surged to 21.5. The Nasdaq 100 and Europe's Stoxx 600 technology sub-index were together set for a market capitalization wipeout of $1.2 trillion, if the losses hold. "DeepSeek shows that it is possible to develop powerful AI models that cost less," said Vey-Sern Ling, managing director at Union Bancaire Privee. "It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers." The rout in Nasdaq futures comes at the start of a big week for earnings from major tech companies including Apple Inc. and Microsoft. Profit growth is expected to have slowed while valuations remain inflated, once again causing concern over the large AI-driven rally in the sector. Roughly 278,000 Nasdaq 100 futures contracts changed hands by 6:18 a.m. New York time, about three times more than the 30-day average for this time of day, according to data compiled by Bloomberg. The AI model from DeepSeek -- founded by quant fund chief Liang Wenfeng -- is widely seen as competitive with OpenAI and Meta Platforms Inc.'s latest offerings. Lauded by investor Marc Andreessen as "one of the most amazing and impressive breakthroughs," DeepSeek's app shows its work and reasoning as it addresses a user's written query or prompt. Released last week, the product is now at the top of Apple Inc.'s App Store rankings, with users praising its transparency. What Bloomberg strategists say... "Magnificent Seven companies have lofty valuations and also a very high margin outlook. Cheaper AI could squeeze these profits in the longer term. ...Capital spending on AI will likely shape tech outlooks and may overshadow otherwise robust results." -- Heather Burke, Markets Live Editor, London. Full note here. Chinese AI-related stocks reacted positively, with mainland-listed Merit Interactive Co. among those surging by their daily limits. Merit is among those with the clearest links to DeepSeek after stating in an earlier filing that it had incorporated the homegrown AI firm's model into marketing. In Hong Kong, the Hang Seng Tech Index climbed as much as 2% ahead of Lunar New Year holidays this week. AI trades slumped elsewhere as investors rethought assumptions on computing power and energy. Siemens Energy AG, one of the few AI winners in Europe, slid 22%. The DeepSeek product "is deeply problematic for the thesis that the significant capital expenditure and operating expenses that Silicon Valley has incurred is the most appropriate way to approach the AI trend,' said Nirgunan Tiruchelvam, head of consumer and internet at Singapore-based Aletheia Capital. "It calls into question the massive resources that have been dedicated to AI." The Nasdaq 100 is trading at 27 times estimated forward earnings, compared with its three-year average of 24 times. Nvidia is at 33 times, though that's slightly down from its three-year average. The DeepSeek release raises new doubts, challenging the notion that China's AI technology is years behind US counterparts. Washington's trade restrictions had kept the most cutting-edge chips out of China's hands, but DeepSeek's model was built using open source technology that is easy to access. "While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted," said Charu Chanana, chief investment strategist at Saxo Markets. "The emergence of China's DeepSeek indicates that competition is intensifying, and although it may not pose a significant threat now, future competitors will evolve faster and challenge the established companies more quickly. Earnings this week will be a huge test." --With assistance from Subrat Patnaik, Bre Bradham, Audrey Wan, Vlad Savov, Newley Purnell, Henry Ren and Michael Msika.

Why DeepSeek is hitting tech stocks hard, including Nvidia's

DeepSeek has caused chaos in the market, and it already has a new competitor. Credit: Bloomberg/Getty Images Today could be a very red day in the stock market, and DeepSeek might be to blame. China's AI startup DeepSeek has captured the attention of enthusiasts ever since its launched its latest reasoning AI model, DeepSeek R1. It's just as smart or even more capable than competing models, including OpenAI's top model, while charging a lot less for AI access. It's free to use as a web or smartphone app, and it's available as open-source, meaning you can use it locally and fine-tune it as you wish, without worrying about the privacy implications or Chinese censorship. In a matter of days, DeepSeek proved to be so popular as to climb to the top of Apple's App Store, surpassing OpenAI's ChatGPT as the most downloaded app. But for owners of Nvidia stock, and stock traders in general, DeepSeek is on track of becoming a black swan -- an unexpected event with extreme consequences. Early on Monday, Nvidia stock went down 13% in premarket trading at one point, threatening to wipe more than $500 billion off of Nvidia's market cap. As of this writing, $NVDA is at $125.95, roughly 11% down from its last traded price of $142, while NASDAQ is down 3.9% in premarket trading. The reason why the market reacted so poorly to DeepSeek can be found in its cost and efficiency. While we don't know all the details about DeepSeek's budget, it apparently cost DeepSeek just $5.58 million to train its DeepSeek V3 model, and the company reportedly had 50,000 Nvidia GPUs at its disposal; a respectable number but still very low when compared to major U.S. AI companies which reportedly have more than 10 times that number. Speaking at the World Economic Forum in Davos, Switzerland, on Wednesday, Microsoft's Satya Nadella said that DeepSeek should be taken "very seriously." "To see the DeepSeek new model, it's super impressive in terms of both how they have really effectively done an open-source model that does this inference-time compute, and is super-compute efficient," he said. And investor Marc Andreessen called DeepSeek "one of the most amazing and impressive breakthroughs" he'd ever seen. If DeepSeek was indeed able to match the performance of OpenAI's best model on far less Nvidia GPUs and at a fraction of a cost, then the implications are that the demand for Nvidia GPUs, which is driving the company's stock price up, may go down in the future. More broadly, the entire AI market may be overblown, as seen by today's performance of AI-related companies. Of course, it's never that simple. DeepSeek, an offshoot of Chinese AI-specialized hedge fund High-Flyer Quant, could actually be running more GPUs and train its models on a higher cost than is publicly known. Furthermore, while the market obviously reacted poorly to the news, it is possible that DeepSeek tech could open up new possibilities in AI in the future, which in turn could once again spark another race to get as much AI hardware as possible. It's also worth noting that DeepSeek is not the only new Chinese player in the space. ByteDance, parent company of TikTok, announced its Doubao-1.5-pro model yesterday, which also beats many top models in a number of benchmarks, though - in contrast to DeepSeek - Doubao is not available as open source. It will likely take a while until the market absorbs all this news and its significance to the AI space; for now, though, the direction is down.

China's DeepSeek AI app sends U.S. tech stocks reeling

The tech-heavy Nasdaq index lost nearly 4 percent in early trading Monday, with chipmaker Nvidia down nearly 12 percent. The sudden popularity of a Chinese artificial intelligence model called DeepSeek pummeled stocks Monday, with the tech-focused Nasdaq index down nearly 4 percent in premarket trading. Several tech companies that have banked on a surge of AI interest also lost value. Nvidia shares were down nearly 12 percent, Microsoft 5 percent and Oracle more than 7 percent by 7:45 a.m. Eastern time. Analysts said the Monday sell-off underscores anxieties about whether the hype around U.S. investment in artificial intelligence will translate into moneymaking use cases, and how soon that will happen. "Markets are sensitive to this situation, as heightened price competition raises doubts about the timing of when profits from multi-billion-dollar investments will materialise," said Alex Kuptsikevich, chief market analyst at FxPro, in an email Monday. DeepSeek is a China-based start-up that last week launched a free AI assistant that it says can operate at a lower cost than American AI models like ChatGPT. The company was founded in 2023 by Liang Wenfeng, co-founder of the hedge fund High Flyer. By Monday it had rocketed to the top of downloads on the Apple Store. DeepSeek has shaken the market because it purports to need fewer and less advanced chips than other AI models, while still performing as well as U.S. rivals -- challenging the premise that only big, well-capitalized companies can make breakthroughs in the sector. The start-up's success also suggests the Biden administration's export controls -- meant to limit China's access to the specialized chips, like those from Nvidia, that power AI models -- haven't completely slowed rivals' development. Other analysts suggested the sell-off may be a premature reflection of fear in the markets, noting that U.S. companies have dominated artificial intelligence innovation so far. WedBush senior analyst Dan Ives, who has been bullish on AI, called Monday's rout a "golden buying opportunity" despite the agitation in U.S. markets. Much of the business case for artificial intelligence rests on the corporate spending of Western companies, which are unlikely to trust a China-based AI company with their data. And U.S.-based companies are far ahead in terms of developing the hardware infrastructure necessary, Ives said. "No US Global 2000 is going to use a Chinese start-up DeepSeek to launch their AI infrastructure and use cases," Ives said.

CNBC Daily Open: DeepSeek batters Nvidia but reinforces AI trend

DeepSeek raises questions on AI investments Chinese artificial intelligence startup DeepSeek on Monday released its reasoning model R1, which rivals the capabilities of OpenAI's o1. The model could have cost less than 10% of Meta's Llama, according to Jefferies estimates. That fanned fears that the huge investments into AI by U.S. firms are unwarranted. U.S. President Donald Trump said Monday that DeepSeek "should be a wake-up call" for American tech companies. Nvidia's $600 billion plunge Nvidia shares plunged nearly 17% on Monday, its worst day since March 2020, on price concerns that DeepSeek raised. The chipmaker lost close to $600 billion in market cap, the biggest drop for any company on a single day in U.S. history. Still, Nvidia described DeepSeek as "an excellent AI advancement," suggesting that the development is a boon for the company rather than a weight on its chip sales. Energy shares fizzle out Power companies most exposed to the tech sector's data center boom plunged Monday, as DeepSeek's claims led investors to question how much energy artificial intelligence applications will actually consume. Vistra closed nearly 30% lower while Talen Energy and GE Vernova tumbled more than 20%. All three stocks gave up this year's gains. Tech shares battered Major U.S. benchmarks fell Monday on a broad retreat by semiconductor and AI-related stocks, though the Dow Jones Industrial Average managed to advance. Japan's Nikkei 225 dropped around 1.5% as the country's chip stocks, affected by DeepSeek's release, extended their declines for a second consecutive day. Taiwan, South Korean and Chinese markets are closed for holidays. [PRO] Nvidia sell-off an 'overreaction': Tom Lee Nvidia's slump is "an overreaction" at a scale close to the 2020 pandemic-sparked sell-off, Tom Lee, head of research at Fundstrat Global Advisors, told CNBC. Here's why Lee isn't changing his mind on Nvidia for now.

Nvidia's market cap plummets as Chinese AI startup DeepSeek sinks the stock

This story incorporates reporting from The Daily Gazette, techxplore and NBC Los Angeles. Nvidia, the leading American semiconductor company, has experienced a substantial loss in market value, exceeding $500 billion. This downturn occurred following the unexpected emergence of a low-cost Chinese generative AI model, casting uncertainty over U.S. tech dominance in the artificial intelligence sector. Nvidia stock plummeted over 15% in midday trading on Wall Street, contributing significantly to this financial decline. The ripple effects were felt across the broader technology sector. The tech-heavy Nasdaq index dropped more than 3%, highlighting growing investor concerns. Companies intimately tied to the AI industry, such as Microsoft and Alphabet, the parent company of Google, saw their stocks turn red. Interestingly, Meta's shares managed to stay afloat, trading positively despite the widespread sell-off. The broad-based S&P 500 index also showed signs of stress with a 1.7% dip, while the Dow Jones Industrial Average remained relatively flat. The emergence of Chinese AI startup DeepSeek has prompted global investors to reassess capital expenditure and valuations across the tech industry. David Morrison, a senior market analyst at Trade Nation, commented on the significance of this event. He noted that the presence of competitively priced Chinese AI models has forced a reconsideration of the anticipated returns and investments in tech. This development has cast a shadow over the previously dominant narrative of U.S. leadership in AI and semiconductors. Kathleen Brooks, the research director at trading platform XTB, remarked on the broader implications, stating that U.S. tech supremacy faces challenges by China's growing capabilities. This sentiment was evident as other major players in the semiconductor industry, such as Broadcom in the U.S. and ASML in the Netherlands, experienced declines. Broadcom's shares fell by 16%, and ASML's stock dropped by 6.7%. These movements signal the market's recalibration in response to the competitive pressures from China's AI advancements. The decline in Nvidia's market capitalization represents one of the most significant single-day value losses in U.S. stock market history. The backdrop to this event includes Nvidia's meteoric rise as a key player in the AI industry, particularly following the surge in tech stocks driven by AI innovations. In 2023, Nvidia ascended into the ranks of the top five most valuable companies globally, buoyed by its vital role in powering AI developments. As the market grapples with this new competitive landscape, investors and industry experts continue to monitor the implications. The disruptive entry of China's AI firm underscores the shifting paradigms within technology and its global market dynamics. How U.S. tech giants adapt and respond to these challenges will likely shape the future trajectory of AI development and market leadership in the months and years ahead.

Nvidia shares down 12% as DeepSeek's 'Sputnik moment' sparks rout in AI-linked stocks

Investors hammered technology stocks on Monday, sending the likes of Nvidia and Oracle plummeting, as the emergence of a low-cost Chinese artificial intelligence model cast doubts on dominance of U.S. companies in this sector. Startup DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of incumbent players' models, possibly marking a turning point in the level of investment needed for AI. Nvidia stock was down 12.4%; Microsoft off 4.3%, Meta Platforms down 3.1% and Alphabet shed 3.4%. Oracle share price was down 7.5% at $13.75. European tech stocks slid about 4%, set for their worst day since October. Chip maker ASML down 8.9%, and Siemens Energy, which provides electric hardware for AI infrastructure, slid around 20%. DeepSeek, which by Monday had overtaken U.S. rival ChatGPT in terms of Apple Store downloads, offers the prospect of a viable, cheaper AI alternative, raising questions on the heavy spending by U.S. companies such as Apple and Microsoft, amid growing investor push for returns. From Tokyo to Amsterdam, shares in AI players tumbled. "We still don't know the details and nothing has been 100% confirmed in regards to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access," Jon Withaar, a senior portfolio manager at Pictet Asset Management, said. The hype around AI has powered a huge inflow of capital into the equity markets in the last 18 months, as investors bought into the technology, inflating company valuations and lifting stock markets to new highs. Little is known about the small Hangzhou startup behind DeepSeek. Its researchers wrote in a paper last month the DeepSeek-V3 model, launched on Jan. 10, used Nvidia's H800 chips for training, spending less than $6 million - the figure referenced by Pictet's Withaar. H800 chips are not top of the line. Initially developed as a reduced-capability product to get around curbs on sales to China, they were subsequently banned by U.S. sanctions. 'SPUTNIK MOMENT' Marc Andreessen, the Silicon Valley venture capitalist, said in a post on X on Sunday that DeepSeek's R1 model was AI's "Sputnik moment", referencing the former Soviet Union's launch of a satellite that marked the start of the space race in the late 1950s. "DeepSeek R1 is one of the most amazing and impressive breakthroughs I've ever seen - and as open source, a profound gift to the world," he said in a separate post. In Europe, ASML which counts Taiwan's TSMC , Intel and Samsung as its customers, dropped almost 7.5%, while Siemens Energy lost nearly 18%. In Japan, startup investor SoftBank Group slid more than 8%. Last week it announced a $19 billion commitment to fund Stargate, a data-centre joint venture with OpenAI. Given the volatility, investors sought out safe-havens such as U.S. Treasuries, which pushed 10-year yields down slumped to 4.52%, while low-yielding currencies like the Japanese yen and the Swiss franc soared against the dollar. Big Tech has ramped up spending on developing AI capabilities and optimism over the possible returns has driven stock valuations sky-high. Nvidia has risen more than 200% in about 18 months and trades at 56 times the value of its earnings, compared with a 53% rise in the Nasdaq, which trades at a multiple of 16 to the value of its constituents' earnings, LSEG data showed. Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, said the market was questioning the capex spend of the major tech companies. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management said: "The idea that the most cutting-edge technologies in America, like Nvidia and ChatGPT, are the most superior globally, there's concern that this perspective might start to change." "I think it might be a bit premature," Ichikawa said. Among other stocks, Vertiv Holdings that builds data center infrastructure slumped 18%. Power companies, expected to benefit from a surge in demand from power-hungry data centers needed to develop AI technology, were down in double digits. Constellation Energy and Vistra fell 15% and 20%, respectively.

DeepSeek AI Model Sparks $1 Trillion Wipeout in Global Tech Valuations

DeepSeek's Game-Changing AI Model Shakes Global Tech Markets Global technology stocks faced significant losses as Chinese artificial intelligence startup DeepSeek introduced a cost-effective . This innovation, capable of running on less advanced chips, raised doubts about the rich valuations of U.S. technology firms, particularly chipmaker Corp. Shares of the Santa Clara-based company dropped 10% in premarket trading Monday, wiping out approximately $340 billion in market value. Nasdaq 100 futures declined as much as 5.2% in overnight trading, marking the largest intraday drop since August, before recovering slightly to a 3.5% loss by 8:30 a.m. in New York. Similarly, Europe's Stoxx 600 technology sub-index saw a sharp decline, led by a 12% drop in ASML Holding NV, a leading chip equipment manufacturer. Together, the Nasdaq 100 and the European tech index were set to lose a combined $1 trillion in market capitalization if the losses persisted.

DeepSeek sparks global AI selloff, with Nvidia losing around $593 billion

Investors sold technology stocks across the globe on Monday as they worried that the emergence of a low-cost Chinese artificial intelligence model would threaten the dominance of current AI leaders like Nvidia, shaving $592.7 billion off the chipmaker's market value. Last week, Chinese startup DeepSeek launched a free AI assistant that it says uses less data at a fraction of the cost of incumbent services. By Monday, the assistant had overtaken U.S. rival ChatGPT in downloads from Apple's app store. This led the tech-heavy Nasdaq to fall 3.1% on Monday. Nvidia was the Nasdaq's biggest drag, with its shares tumbling just under 17% and marking a record one-day loss in market capitalization for a Wall Street stock, according to LSEG data. Nvidia's market-cap loss on Monday was more than double the previous one-day record, set by Nvidia last September. The Nasdaq's next-biggest drag was chipmaker Broadcom, which finished down 17.4%, followed by ChatGPT backer Microsoft, which fell 2.1% and then Google parent Alphabet, which ended down 4.2%.

Wall Street analysts react to DeepSeek's AI push as markets sell off By Investing.com

Investing.com -- Chinese AI startup DeepSeek shook global tech markets on Monday, fueling concerns about the US's technological edge in the AI space. Over the weekend, excitement grew around DeepSeek's new AI model, which is cost-effective and operates on less-advanced chips, raising doubts about the lofty valuations of companies like Nvidia (NASDAQ:NVDA), a key player in the AI boom. Nasdaq 100 futures fell by as much as 3.1%, while S&P 500 futures slid 1.9% early Monday. In Europe, tech stocks led declines, with ASML Holding NV (AS:ASML) sinking more than 10%. Meanwhile, volatility surged as VIX futures spiked. "If DeepSeek's innovations are adopted broadly, an argument can be made that model training costs could come down significantly even at U.S. hyperscalers, potentially raising questions about the need for 1-million XPU/GPU clusters as projected by some," Raymond (NSE:RYMD) James analysts said in a note. However, it appears more logical that DeepSeek's advancements are likely to push US hyperscalers to capitalize on their access to GPUs, further differentiating themselves from cost-effective alternatives. "We believe the Stargate announcement and capex commentary from META clearly support this view," analysts added. Moreover, they note that declining training costs could unlock new AI use cases, driving substantial growth in inferencing, as reasoning models like R1 and OpenAI's require significantly more computational power for inference. Founded by quant fund leader Liang Wenfeng, DeepSeek's AI model is being compared to offerings from OpenAI and Meta (NASDAQ:META). Investor Marc Andreessen described it as "one of the most amazing and impressive breakthroughs." The model, which explains its reasoning in response to user prompts, quickly rose to the top of Apple's App Store rankings after launching last week, earning praise for its transparency. Chinese AI-related stocks surged in response. Mainland-listed Merit Interactive (SZ:300766), which had integrated DeepSeek's model into its marketing platform, hit its daily trading limit. Bernstein analysts said they see no reason for panic for US hyperscalers following DeepSeek's advancements, emphasizing that innovations like these are essential for AI's progression as model costs continue to rise. They argue that efficiency gains, such as those achieved by DeepSeek, are unlikely to reduce long-term spending but instead drive higher demand for compute capacity. The analysts believe DeepSeek's strategies are likely not unknown to other top-tier AI labs, making it improbable that such innovations are entirely unique. "It seems like a stretch to think the innovations being deployed by DeepSeek are completely unknown by the vast number of top tier AI researchers at the world's other numerous AI labs," they wrote. Bernstein points to Meta's increased capex, the Stargate announcement, and China's $140 billion AI spending plan as evidence that investments in AI are accelerating. As such, they remain bullish on AI-related stocks in the US, particularly Nvidia and Broadcom (NASDAQ:AVGO), urging investors "not to buy into the doomsday scenarios" circulating online.

DeepSeek's 'Sputnik moment' prompts investors to sell big AI players

Investors hammered technology stocks on Monday, sending the likes of Nvidia and Oracle plummeting, as the emergence of a low-cost Chinese artificial intelligence model cast doubts on Western companies' dominance in this sector. Startup DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of incumbent players' models, possibly marking a turning point in the level of investment needed for AI. Futures on the Nasdaq 100 slid almost 4%, suggesting the index could see its biggest daily slide since September 2022 later on Monday, if those losses are sustained. Those on the S&P 500 dropped 2%. Shares in AI chipmaker Nvidia fell more than 11%, rival Oracle dropped 8.5% and AI data analytics company Palantir lost 6.5% in pre-market trading. DeepSeek, which by Monday had overtaken U.S. rival ChatGPT in terms of downloads on the Apple Store, offers the prospect of a viable, cheaper AI alternative which has raised questions about the sustainability of the level of spending and investment on AI by Western companies, including Apple and Microsoft. From Tokyo to Amsterdam, shares in AI players tumbled. "We still don't know the details and nothing has been 100% confirmed in regards to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access," Jon Withaar, a senior portfolio manager at Pictet Asset Management, said. The hype around AI has powered a huge inflow of capital into the equity markets in the last 18 months in particular, as investors have bought into the technology, inflating company valuations and sending stock markets to record highs. Little is known about the small Hangzhou startup behind DeepSeek. Its researchers wrote in a paper last month that the DeepSeek-V3 model, launched on Jan. 10, used Nvidia's H800 chips for training, spending less than $6 million - the figure referenced by Pictet's Withaar. H800 chips are not top-of-the-line. Initially developed as a reduced-capability product to get around restrictions on sales to China, they were subsequently banned by U.S. sanctions. 'Sputnik moment' Marc Andreessen, the Silicon Valley venture capitalist, said in a post on X on Sunday that DeepSeek's R1 model was AI's "Sputnik moment," referencing the former Soviet Union's launch of a satellite that marked the start of the space race in the late 1950s. "Deepseek R1 is one of the most amazing and impressive breakthroughs I've ever seen -- and as open source, a profound gift to the world," he said in a separate post. In Europe, ASML which counts Taiwan's TSMC, Intel and Samsung as its customers, dropped almost 7.5%, while Siemens Energy lost nearly 18%. In Japan, startup investor SoftBank Group slid more than 8%. Last week it announced a $19 billion commitment to fund Stargate, a data-center joint venture with OpenAI. Given the volatility, investors sought out safe-havens such as U.S. Treasuries, which pushed 10-year yields down nearly 10 basis points to 4.52%, while low-yielding currencies like the Japanese yen and the Swiss franc soared against the dollar. Big Tech has ramped up spending on developing AI capabilities and optimism over the possible returns has driven stock valuations sky-high. Nvidia alone has risen by over 200% in about 18 months and trades at 56 times the value of its earnings, compared with a 53% rise in the Nasdaq .IXIC, which trades at a multiple of 16 to the value of its constituents' earnings, according to LSEG data. Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore said the market was questioning the capex spend of the major tech companies. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management said: "The idea that the most cutting-edge technologies in America, like Nvidia and ChatGPT, are the most superior globally, there's concern that this perspective might start to change."

How China's DeepSeek Shook up US Markets, by the Numbers

News from China upset U.S. markets Monday and disrupted the frenzy that had built up around artificial intelligence. A company called DeepSeek said it had developed a large language model that can compete with U.S. AI 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. Nvidia, Broadcom and Google's parent company Alphabet were among the high-flying stocks that fell to earth, at least for now. The noise in the tech sector obscured some solid gains in other parts of the market. Here's a look at DeepSeek's impact on the financial markets, by the numbers: 5.6% Monday's decline in the S&P 500 tech sector, the biggest drop in the index since September 2020. Nvidia was one of eight stocks in the tech sector to post double-digit losses on the day. The decline for the index would have been worse if not for a gain of more than 3% in shares of Apple. $590 billion The approximate decline in Nvidia's market value. That decline is more than the combined market value of home improvement giants Home Depot and Lowe's. Nvidia still carries a market value of about $2.9 trillion. $27.6 billion The drop in Oracle CEO Larry Ellison's net worth after the selloff, according to Forbes Real-Time Billionaires list. Ellison's net worth jumped last week after President Donald Trump said a new partnership formed by OpenAI, Oracle and SoftBank would spend up to $500 billion for infrastructure tied to AI. Forbes says Ellison is still worth $200 billion. Jensen Huang, CEO of Nvidia, saw his net worth drop $20.8 billion to $103.6 billion. 28.3% The decline in Vistra Corp., the biggest drop for any stock in the S&P 500. Vistra isn't a tech company -- it's an independent power producer. Its shares soared last year on expectations that the build out of AI infrastructure in the US. will require enormous amounts of power. 351 The number of stocks in the S&P 500 that actually rose Monday. That the index dropped sharply on a day when better than three-fifths of its component stocks rose demonstrates the outsized influence of tech stocks such as Nvidia. The Dow Jones Industrial Average, which has much less of an emphasis on tech than the S&P 500 and Nasdaq, closed with a modest gain. Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AI-fueled stock rally dealt $1 trillion blow by Chinese upstart

DeepSeek, a Chinese startup, unveiled an AI platform that competes with top US models at lower costs, causing a major selloff in US tech stocks. The Nasdaq 100 index dropped significantly, raising questions about future AI investments and the dominance of US firms in the AI sector.For the better part of two years, artificial intelligence technologies have been a nonstop gift for US equities investors. The Nasdaq 100 Index rose 92% from the start of 2023, adding more than $14 trillion in value and minting billions for a handful of tech executives and founders. Just last week, the S&P 500 Index powered to another record thanks in large part to more AI hype, this time from the Oval Office in the form of $500 billion in planned investments. President Donald Trump declared the US the global AI leader -- a statement few would've contested long before he even uttered it. Nvidia Corp. had the best chips. Meta Platforms Inc., OpenAI and other US tech giants had significant leads in developing the bots that would drive it. Then came DeepSeek, a Chinese startup whose AI platform appears to look as good as anything on the market at a fraction of the price and a sliver of the energy consumption. The Nasdaq 100 fell 3% Monday, the most in six weeks, leaving it virtually flat for the year and worth almost $1 trillion less than on Friday. Nvidia had its worst day since March 2020 when the pandemic hit, losing almost $600 billion in market value in the biggest wipe-out in history. Energy firms expected to profit from unprecedented AI demand sank, led by a 21% beatdown for Constellation Energy Corp. Suddenly, a rally predicated largely on US AI dominance turned into a question of whether the hundreds of billions in AI investments would ever lead to profits large enough to justify the rich valuations afforded to Megacap stocks. The group makes up 30% of the S&P 500's by weighting, more than at any time in history. "Today's moves show just how precarious this market set up is," Max Gokhman, senior vice president at Franklin Templeton Investment Solutions. "When valuations stretch to the sky it's easier for small trembles to make the entire market rumble." DeepSeek's latest AI model rose to the top of the Apple's appstore charts over the weekend, presenting a visible challenge to costlier models like OpenAI and raising questions over the hundreds of billions in planned spending on the technology by the likes of Meta, Microsoft Corp. and Alphabet Inc. Nvidia, whose shares soared ninefold in the past two years, tumbled 17%. "DeepSeek shows that it is possible to develop powerful AI models that cost less," said Vey-Sern Ling, managing director at Union Bancaire Privee. "It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers." Nvidia, for its part, downplayed the threat from DeepSeek, calling that an "excellent AI advancement" that complies with US technology export controls. While most of Nvidia's best products can't be sold to Chinese companies, its statement points out that inference, the work of running AI models, nonetheless needs a lot of its products. "Inference requires significant numbers of Nvidia GPUs and high-performance networking," the company said. The rout in Nasdaq companies comes at the start of a big week for earnings from major tech companies including Apple and Microsoft, with investors already prepared to scrutinize massive capital outlays against returns that have so far been paltry in comparison. To be sure, the selloff in US markets was relatively orderly despite the bludgeoning for megacap tech. The S&P 500 pared its losses to less than 1.5%, with more than 350 of its members advancing -- highlighting that the damage was mostly contained to sectors exposed to AI. The Dow Jones Industrial Average rose 0.7%, with only seven of its members finishing in the red. Analysts said some companies such as Salesforce Inc., banks and major retailers -- companies expected to use AI bots rather than develop them -- stand to benefit from DeepSeek's open source approach if they can deploy AI for a fraction of what it otherwise would have cost. At the same time, there's more to the market than tech and AI. The Federal Reserve will start its two-day policy meeting Tuesday, with officials expected to keep rates steady as the battle against inflation continues. And Trump's deregulation push and plan to extend deep tax cuts have the potential to spur growth, albeit with the risk of being inflationary. Regardless, the shockwave from DeepSeek's latest iteration, which was released last week, has caused a rethinking of how to value anything related to AI. It is widely seen as competitive with OpenAI and Meta's latest offerings. Lauded by investor Marc Andreessen as "one of the most amazing and impressive breakthroughs," DeepSeek's app shows its work and reasoning as it addresses a user's written query or prompt. "We don't know whether this is the 'Sputnik Moment' for stocks, but this is certainly a wake up call that we are not the only game in town," Paul Nolte, market strategist and senior wealth manager at Murphy & Sylvest Wealth Management, said. "That requires a lot of investors to look at the AI companies in a different way: To put these very high valuations in the stocks thinking they have cornered the market is a huge mistake and that is being re-rated." The Nasdaq 100 is trading at around 27 times estimated forward earnings, compared with its three-year average of 24 times. Nvidia is at 33 times, though that's slightly down from its three-year average. The DeepSeek release raises new doubts, challenging the notion that China's AI technology is years behind US counterparts. Washington's trade restrictions had kept the most cutting-edge chips out of China's hands, but DeepSeek's model was built using open source technology that is easy to access. "While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted," said Charu Chanana, chief investment strategist at Saxo Markets. "The emergence of China's DeepSeek indicates that competition is intensifying, and although it may not pose a significant threat now, future competitors will evolve faster and challenge the established companies more quickly. Earnings this week will be a huge test."

Tech selloff subsides, DeepSeek triggers AI rethink

Global technology shares recovered some poise on Tuesday, but remained vulnerable after a rout sparked by the emergence of a low-cost Chinese artificial intelligence model made investors question the sky-high valuation and dominance of AI bellwethers.Global technology shares recovered some poise on Tuesday, but remained vulnerable after a rout sparked by the emergence of a low-cost Chinese artificial intelligence model made investors question the sky-high valuation and dominance of AI bellwethers. Shares of chipmaker Nvidia, the poster child of the AI boom in recent years, fell 17% on Monday, wiping $593 billion from its market value - a record one-day loss for any company - and dragging U.S. stocks lower. By Tuesday, Nvidia shares were up nearly 6% in Frankfurt, while those in Oracle rose 3.4% and AI data analytics company Palantir rose 2.97%. It all stemmed from a free AI assistant launched by Chinese startup DeepSeek last week that the firm said uses less data at a fraction of the cost of services available currently. That garnered attention worldwide, although scepticism lingers. OpenAI CEO Sam Altman called it an "impressive model". "We will obviously deliver much better models and also it's legit invigorating to have a new competitor!," Altman, the head of the AI firm behind ChatGPT, said in a social media post. The launch and increasing popularity of DeepSeek spurred investors to dump tech stocks globally, with ripples felt from Tokyo to Amsterdam to Silicon Valley. Markets in tech-heavy South Korea and Taiwan are closed for the next few days for Lunar New Year. Mainland China is closed until Feb. 4, leaving the spotlight firmly on Japanese firms. On Tuesday, chip-testing equipment maker Advantest, a supplier to Nvidia lost 10% after diving nearly 9% on Monday. Chip-making equipment maker Tokyo Electron and technology start-up investor SoftBank Group slid 5%. "It's clearly a sell first, ask questions later approach, and we've actually seen that kind of move in the past in Japan," said Kei Okamura, a portfolio manager at Neuberger Berman, referring to a global market meltdown in August headlined by Japan's Nikkei. In Europe on Tuesday, shares in Dutch semiconductor company ASML, which closed down 7.1% on Monday, opened up 0.9%, while shares in BE Semiconductor rose 1.2%. Over in the U.S., Broadcom finished down 17.4%, while ChatGPT backer Microsoft fell 2.1% and Google parent Alphabet closed down 4.2%. The Philadelphia semiconductor index tumbled 9.2%, for its deepest percentage drop since March 2020. The selloff has brought into the spotlight the crowded positioning among investors and the billions of dollars U.S. tech giants are pouring in to develop AI capabilities, as well as the extremely high valuation of some of these firms. "What makes Monday's tech selloff so jarring is that the valuations of many of these AI and tech companies offer no margin of error," said David Bahnsen, chief investment officer at The Bahnsen Group. "The excessive weighting these tech stocks have in many investor portfolios and the high concentration these tech stocks have in the market indices was a significant and under-appreciated risk issue." The hype around AI has powered a huge flow of capital into equities, inflating valuations and lifting stock markets to record highs, leading to an increase of around $10 trillion in the market value of "Magnificent Seven" companies since ChatGPT kicked off the AI boom in November 2022. It is not just the chipmakers and tech companies but companies focused on data centres also taking a hit, with Malaysia's utility conglomerate YTL Power down 9% on Tuesday, its third session of steep loss. "We're still, like many investors, gathering information," said Neuberger Berman's Okamura, noting that a lot of investors are scrambling to gather more information and decide their next move. "I think we're going to see many more of these (developments) going forward. And we've seen technological advancements like this that have had implications for cost spend." Investor focus will be on the flurry of tech earnings this week, with executives likely keen to calm frayed nerves and ease concerns about capital spending. Little is known about the Hangzhou startup behind DeepSeek, whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer, records showed. Its researchers wrote in a paper last month that its DeepSeek-V3 model, launched on Jan. 10, used Nvidia's lower-capability H800 chips for training, at a cost of less than $6 million. The launch and the popularity of the app contrasts with the lacklustre reception that met the Chinese ChatGPT equivalent made by search engine giant Baidu, which exposed the gap in AI capabilities between U.S. and Chinese firms. The quality and cost efficiency of DeepSeek's models have flipped this narrative on its head and prompted a warning from U.S. President Donald Trump, who called it "a wakeup call for our industries." Japan's digital minister Masaaki Taira said DeepSeek's emergence had upended conventional wisdom that Chinese AI was years behind. "It's been said that Chinese generative AI might be about five years behind, but that turned out to be wrong and it seems to be on a fairly good track," Taira said, adding that Japan was taking a closer look into suggestions that Chinese AI may be more cost effective.

$1 trillion disappear from U.S. markets as Nvidia crumbles

Nvidia, the world's largest company by market capitalization just days ago, suffered its biggest single-day market cap decline in history on Monday, shedding a staggering $465 billion as its stock plummeted nearly 17%. The sell-off was triggered by growing concerns over the rise of cost-efficient artificial intelligence models, particularly from Chinese startup DeepSeek, whose latest innovation has sent shockwaves through the tech industry and upended investor confidence in AI-driven stocks. According to Daniel Newman, NVIDIA issues a statement on DeepSeek: "DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling. DeepSeek's work illustrates how new models can be created using that technique, leveraging widely available models and compute that is fully export control compliant. Inference requires significant numbers of NVIDIA GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling." DeepSeek, a relatively unknown Chinese AI firm founded in 2023 by hedge fund manager Liang Wenfeng, unveiled its latest AI model, DeepSeek-V3, last week. The model, which reportedly cost just $5.6 million to train, has been hailed as a breakthrough in AI efficiency. By comparison, OpenAI's GPT-4 model cost over $100 million to develop. DeepSeek's ability to achieve comparable performance at a fraction of the cost has raised questions about the future of AI infrastructure investments, particularly for companies like Nvidia, whose high-end chips power many of the world's most advanced AI systems. "If DeepSeek's innovations are adopted broadly, an argument can be made that model training costs could come down significantly," wrote Raymond James semiconductor analyst Srini Pajjuri in a note to investors. This has led to fears that the demand for Nvidia's chips, which have been central to the AI boom, could decline as companies seek more cost-effective alternatives. How DeepSeek triggered Nasdaq's 4.5% drop, Dow's 430-point slide, and S&P's 2.3% loss The impact of DeepSeek's announcement was felt across the tech sector, with chip stocks and AI-related companies experiencing sharp declines. Broadcom shares fell over 18%, Micron dropped nearly 13%, and Advanced Micro Devices slid more than 6%. Meanwhile, tech giants like Microsoft, Alphabet, and Meta saw their shares drop by 2.5%, 4%, and 3%, respectively. In Europe, Dutch chip equipment maker ASML saw its shares fall by more than 7%, while Siemens Energy, a hardware manufacturer tied to AI infrastructure, plunged by 20%. The sell-off wiped out approximately $1 trillion in market value from U.S. tech companies, marking one of the most significant single-day declines in recent history. The Nasdaq Composite Index fell 4.5%, its worst day since March 2020, when the COVID-19 pandemic rattled global markets. DeepSeek's rise comes amid escalating geopolitical tensions between the U.S. and China over AI dominance. The U.S. has imposed strict export restrictions on advanced chips and chipmaking equipment to China, aiming to curb its AI development. However, DeepSeek's success suggests that Chinese firms are finding ways to innovate despite these limitations. The company reportedly stockpiled Nvidia A100 chips before the export ban and combined them with lower-end chips to develop its models. President Donald Trump's recent announcement of the $500 billion Stargate AI project, aimed at bolstering U.S. AI infrastructure, underscores the high stakes of this competition. Yet, DeepSeek's low-cost model has cast doubt on whether such massive investments are necessary. "DeepSeek has taken the market by storm by doing more with less," said Giuseppe Sette, president of AI research firm Reflexivity. Someone stop DeepSeek: Meet Janus-Pro-7B, another free AI model The rapid rise of DeepSeek has introduced significant uncertainty into the AI market. While some analysts argue that cheaper training costs could democratize AI and spur broader adoption, others worry that the massive investments made by U.S. tech giants could become obsolete. "This idea of a low-cost Chinese version hasn't necessarily been forefront, so it's taken the market a little bit by surprise," said Fiona Cincotta, senior market analyst at City Index. For Nvidia, the stakes are particularly high. The company's stock has been a darling of the AI boom, but DeepSeek's innovations threaten to disrupt its dominance. "DeepSeek could potentially derail the investment case for the entire AI supply chain," said Singapore-based technology equity adviser Vey-Sern Ling. As the dust settles, one thing is clear: the AI is evolving faster than anyone anticipated. DeepSeek's rise has not only challenged the economic assumptions underpinning the AI boom but also highlighted the fierce competition between the U.S. and China in shaping the future of technology.

Nvidia falls 10% in premarket trading as China's DeepSeek triggers global tech sell-off

U.S. technology firms plunged in premarket trading, as Chinese startup DeepSeek sparked concerns over competitiveness in AI and America's lead in the sector, triggering a global sell-off. Shares of chip designer Nvidia, a huge beneficiary of the AI hype, were down 9.84% at 05:11 a.m. ET ahead of the market open. Netherlands-based chip companies ASML and ASM International tumbled 10.59% and 14.94% respectively in European trade, while in Asia, Japanese chip-related stocks were broadly lower. DeepSeek launched a free, open-source large-language model in late December, claiming it was developed in just two months at a cost of under $6 million -- a much smaller expense than the one called for by Western counterparts. Last week, the company released a reasoning model that also reportedly outperformed OpenAI's latest in many third-party tests. The developments have stoked questions about the amount of money big tech companies have been investing in AI models and data centers. "DeepSeek clearly doesn't have access to as much compute as U.S. hyperscalers and somehow managed to develop a model that appears highly competitive," Srini Pajjuri, semiconductor analyst at Raymond James, said in a note Monday.

Nvidia, TSMC, ASML Among Tech Stocks Sinking on DeepSeek Threat

Among shares falling were those of hyperscalers like Meta Platforms and nuclear power provider Vistra. A slew of artificial intelligence stocks, including chip maker Nvidia (NVDA), are tumbling in premarket trading Monday after Chinese startup DeepSeek released a cutting-edge AI model that runs on less-advanced chips and at a lower cost than U.S. rivals like OpenAI. The Chinese company's launch is raising questions about tech shares being overvalued and that Big Tech is overspending on their AI buildout. DeepSeek's app was a top downloaded program on the Apple store in the U.S. Monday morning. Earlier this month, DeepSeek said its performance was "on par with ChatGPT." DeepSeek's success has come despite U.S. export controls on cutting-edge chips that have hampered Chinese AI companies. Nvidia was falling 11% premarket Monday morning, while U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) were down more than 11% and ASML Holding (ASML), the Dutch company that makes semiconductor-making machinery, were falling around 7%. Other chipmakers were also hit: Broadcom's (AVGO) shares are slumping around 12%, while Micron Technology (MU) is down around 6%. Nasdaq futures are falling around 4%. Meta Platforms (META), which reports results Wednesday, is down almost 4%. Even the nuclear power providers that had been seen as essential to powering AI data centers are slumping: Constellation Energy (CEG) and Vistra (VST) are down around 11%. Still, in a note out Monday morning, Citi analysts said they were sticking with a buy rating on Nvidia, and expected AI companies to continue buying advanced chips. "While DeepSeek's achievement could be groundbreaking, we question the notion that its feats were done without the use of advanced GPUs to fine tune it and/or build the underlying [large language model] the final model is based on through the Distillation technique," the analysts wrote, noting that "while the dominance of the US companies on the most advanced AI models could be potentially challenged." American firms' access to cutting-edge chips will be an advantage "in an inevitably more restrictive environment," the analysts wrote.

Chip Stocks Tumble After China's DeepSeek Cast Doubts On AI Spending -- 2nd Update

Global chip stocks slumped Monday after Chinese artificial-intelligence company DeepSeek said it had developed AI models that nearly matched American rivals despite using inferior chips, raising questions about the need to spend huge sums on advanced gear provided by Nvidia and other tech giants to train AI models. DeepSeek said last week that the performance of its latest R1 model was on par with OpenAI's o1-mini model that the ChatGPT maker released in September. The announcement came after DeepSeek said in a late-December report that it used a cluster of more than 2,000 Nvidia chips to train its other V3 model, compared with the tens of thousands of chips that are normally used for training models of a similar size. The company said training one of its latest models cost $5.6 million, compared with the $100 million to $1 billion range cited last year by Dario Amodei, chief executive of AI company Anthropic. DeepSeek's models, both in the top 10 on popular ranking platform Chatbot Arena, sparked a Monday selloff led by chip stocks amid concerns that lower costs to run the models could undermine demand for increasingly sophisticated semiconductors. The tech-heavy Nasdaq Composite index shed more than 3% in early afternoon trading. Nvidia shares slumped more than 15%, with Micron Technology down 10% and Advanced Micro Devices down 6%. Shares of OpenAI backer Microsoft fell more than 3%. Power stocks--sensitive to AI news given the need for electricity to fuel data centers--also fell. GE Vernova shares fell 20%, while Vistra shed 27%. In Europe, shares of Siemens Energy and Schneider Electric closed down 20% and 9.5% respectively. Meanwhile, shares of Dutch semiconductor-equipment maker ASML Holding closed 7% lower, wiping out more than $15 billion from its market value. In Asia, shares of chip-making equipment supplier Tokyo Electron closed nearly 5% lower. "There is a new AI challenger in town and investors are spooked at what they've discovered," AJ Bell investment director Russ Mould wrote in a note to clients. "Its assistant is free to use and runs off lower-cost chips and less data--implying a major challenger to the established AI names in the West." DeepSeek's cheaply trained models come despite export curbs that Washington leveraged in an effort to limit the sale of advanced AI chips that Beijing could use to advance its military capabilities. DeepSeek's perceived success risks intensifying the AI war between the U.S. and China, Quilter Cheviot's Ben Barringer said in a note to investors, particularly after the recent announcement of Stargate--a joint venture between OpenAI, SoftBank Group, Oracle and MGX to build data centers in the U.S. for OpenAI. News Corp, owner of Dow Jones Newswires and The Wall Street Journal, has a content-licensing partnership with OpenAI. Kathleen Brooks, research director at XTB, said in market comments that the sharp decline in AI stocks indicates U.S. tech giants might be losing their dominance premium. "If China is catching up quickly to the U.S. in the AI race, then the economics of AI will be turned on its head," she said.

Nvidia shares fall 12% as Chinese AI startup DeepSeek triggers panic...

Big technology stocks including Nvidia, Microsoft, Meta and Tesla tumbled in premarket trading on concerns that a Chinese artificial intelligence startup could threaten America's dominance in AI. Shares of Nvidia plunged nearly 12% on news reports about the capabilities of DeepSeek -- a China-based startup which has made waves in the industry after launching a free, open-source large-language model in December. DeepSeek was reportedly developed in just two months at a cost of under $6 million -- a stark contrast to the billions of dollars typically spent by Western tech giants on AI research and infrastructure. The developments triggered a global sell-off, particularly impacting semiconductor firms, as fears mounted over the sustainability of US dominance in the sector. Shares of Nvidia, a key player in AI-driven chip design and a significant beneficiary of the AI boom, plummeted 11.8% as of 07:05 a.m. Eastern Time before the market opened on Monday. Microsoft, which has plowed billions of dollars into Sam Altman's OpenAI, the company behind ChatGPT, was off 4.1% in premarket trading. Shares of Meta were off 1.7% while Tesla saw its share price drop by more than 2.7% in pre-market trading. European chipmakers also faced sharp declines, with Netherlands-based ASML and ASM International falling 8.9% and 13.6%, respectively. Meanwhile, Nasdaq futures have tumbled 2.3%, S&P 500 futures have declined 1.3% and Dow Jones Industrial Average futures have decreased by 0.9% before the opening bell on Monday. The rapid progress of DeepSeek has sparked scrutiny over the immense sums being funneled into AI research by leading US firms, raising questions about efficiency and cost-effectiveness. "DeepSeek clearly doesn't have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive," said Srini Pajjuri, a semiconductor analyst at Raymond James, in a note on Monday. Meanwhile, analysts at Citi recognize that DeepSeek's technological strides have raised investor questions about the cost of computational power. However, they emphasize that American companies still maintain a significant advantage due to their access to the most sophisticated chips. "While the dominance of US companies in the most advanced AI models could be potentially challenged, their access to high-end GPUs remains a key differentiator," Citi analysts stated in a note. The market turbulence coincides with a broader push by the US government to reinforce AI leadership. President Trump recently announced a $500 billion AI initiative known as Stargate. The vast sum of money being invested in the project, which includes the involvement of top firms such as OpenAI, Oracle and SoftBank, underscores the strategic importance of advanced chips in maintaining American competitiveness in AI development.

Tech Slides Amid Chip Rout Following Chinese AI Breakthrough -- Tech Roundup

Shares of technology companies plunged as an apparent AI breakthrough in China caused a rout in mega-cap U.S. companies, amid fears of rising competition and overspending on U.S. tech infrastructure. Artificial-intelligence models from DeepSeek, the Chinese company, have zoomed to the global top 10 in performance, according to a popular ranking. DeepSeek developed its AI system without premium, cutting-edge foreign processors. Shares of Nvidia, the leading maker of these premium chips plunged by 17%, for their biggest decline since 2020. China is restricted from obtaining chips made by Nvidia and rivals such as Broadcom due to U.S. export curbs, and some strategists said DeepSeek will hit a wall in its efforts because of this exclusion. DeepSeek estimated it built one of its AI models for about $5.6 million. U.S. AI developers recently estimated the costs of building a comparable model anywhere between $100 million and $1 billion. Silicon Valley venture capitalist Marc Andreessen described DeepSeek-R1 as "AI's Sputnik moment," a reference to when the Soviet Union launched the first artificial Earth satellite in 1957, kicking off the Space Race. Others were more skeptical about the significance of the breakthrough. "The markets are clearly panicking today and one would assume it's likely over the concern about DeepSeek," said J.D. Joyce, president of Houston financial advisory Joyce Wealth Management. "The question becomes: have the Chinese found a way to use AI in a much less costly way, or is there more than meets the eye." Joyce said DeepSeek appeared to be a technology that matched AI innovations rather than making any major step forwards of its own. He expressed skepticism about the Chinese company's ability to create something of comparable quality for "pennies on the dollar." "Sometimes, when things look too good to be true, it gives me pause," said Joyce. With several Magnificent Seven companies due to report earnings this week, "I imagine there will be quite the rebuttal," said Joyce. Among the few perceived U.S. winners was Apple, which has, to date, been more of a user of AI than a producer of it. The prospects of cheaper AI software buoyed Apple shares. Investors may have also reassessed their view of Apple's reluctance to invest in its own AI capabilities.

Nvidia stock plunges 14% as a big advance by China's DeepSeek rattles AI investors

Nvidia (NVDA-3.33%) stock plunged as much as 14% in pre-market trading on Monday after Chinese artificial intelligence startup DeepSeek's latest model raised questions about American competitiveness in the AI space. DeepSeek in December launched a free, open source large language model (LLM), which it claimed it had developed in just two months for less than $6 million. And last week, the company said it launched a model that rivals OpenAI's ChatGPT and Meta's (META+1.48%) Llama 3.1 -- and which rose to the top of Apple's (AAPL-0.60%) App Store over the weekend. Most notably, DeepSeek built the model using lower capability chips from Nvidia, which could put pressure on the semiconductor darling if other firms move away from its premium offerings. Analysts at Wedbush said in a research note Monday that "tech stocks are under massive pressure led by Nvidia as the Street will view DeepSeek as a major perceived threat to U.S. tech dominance and owning this AI Revolution." Nvidia stock was down almost 12% Monday morning. The news sent other major chip stocks tumbling, including ASML (ASML-1.99%), which fell 7%, and Broadcom (AVGO+1.50%), which took a 12% dip. The sell-off sent the tech-heavy Nasdaq index down in the pre-market, with futures almost 4% lower. "U.S. tech companies are trading at premium valuations, with major AI players like Nvidia, Microsoft (MSFT-0.90%), and Alphabet (GOOGL+1.00%) commanding forward [price-to-earnings] multiples far above historical averages," said Charu Chanana, chief investment strategist at investment platform Saxo, in a statement. "With these stocks priced for perfection, even minor disruptions, such as DeepSeek proving advanced AI can be built without top-tier chips, could weigh heavily on share prices." With the end goal of AI being artificial general intelligence (AGI) -- and with U.S. companies well on their way to achieve it within the coming years -- Wedbush analysts believe Monday's investor jitters may be overblown. "While the model is impressive and it will have a ripple impact," they said, "the reality is that Mag 7 and US tech is focused on the AGI endgame with all the infrastructure and ecosystem that China and especially DeepSeek cannot come close to in our view."

'A shot across the bow at the U.S. tech world': analysts weigh in on DeepSeek

Tech stocks have erased virtually all their 2025 gains after Chinese startup DeepSeek raised concerns about the competitiveness of the artificial intelligence field with its release of a free, open-source AI tool that founders claim was created for just $6 million. The reaction from all corners has been extreme. Hackers, seemingly, have launched "large-scale malicious attacks" on the company's service, causing it to temporarily limit user registrations. Nvidia investors are dumping that company's stock, with shares falling more than 16% and the price hitting a point it hasn't seen since last September. Analysts, though, are a bit more sanguine about the news for the most part. Wedbush's Dan Ives acknowledged that DeepSeek's lower startup costs and reported use of reduced capacity chips from Nvidia was "a shot across the bow at the U.S. tech world," but said the sell-off was a "golden buying opportunity" for investors -- and the threat to other AI companies was overstated. "DeepSeek impressed the tech community with this LLM [large language model] . . . but this is not launching 100x the capacity/algorithms that is needed to even consider this a competitive threat [to other AI companies] in our view," Ives wrote.

China's DeepSeek sparks AI market rout

LONDON (Reuters) - Technology shares around the world slid on Monday as a surge in popularity of a Chinese discount artificial intelligence model shook investors' faith in the AI sector's voracious demand for high-tech chips. Startup DeepSeek has rolled out a free assistant it says uses lower-cost chips and less data, seemingly challenging a widespread bet in financial markets that AI will drive demand along a supply chain from chipmakers to data centres. MARKET REACTION: Nasdaq futures fell over 3%, S&P 500 futures tumbled nearly 2%. Dominant AI chipmaker Nvidia's 8.4% slide led declines among heavyweight megacap stocks in premarket trading, with Microsoft off by 4%, Meta Platforms down 3.7% and Alphabet shedding 3.1%. European tech stocks slid over 5%, set for their worst day since October. Chip maker ASML fell 9.4%, and Siemens Energy, which provides electric hardware for AI infrastructure, slid around 20% at one point from a record high on Friday. Japan's Nikkei shed nearly 1%, weighed by heavyweight tech names. AI-focused startup investor SoftBank Group fell over 8%. COMMENTS: JON WITHAAR, SENIOR PORTFOLIO MANAGER, PICTET ASSET MANAGEMENT, SINGAPORE: "We still don't know the details and nothing has been 100% confirmed in regards to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access." "Is it negative for Nvidia in the short term? Yes, as expectations are sky high on Blackwell (chips)and positioning is long in anything AI supply chain related, but ultimately anything that makes AI cheaper to implement is positive for those selling AI related products and applications and using AI related tools - an ever growing group." "But let's see the devil is in the detail and as you can imagine a Chinese model will be controversial for many uses. Still it is a cold shower and a dose of reality for a sector that probably needed it." DANIEL TAN, PORTFOLIO MANAGER, GRASSHOPPER ASSET MANAGEMENT, SINGAPORE: "The selloff in Japan and U.S. tech names should not be a surprise given high valuations based on P/E and P/B ratios. With the current rate of P/E priced for some U.S. and Japan tech names, the market is expecting future earnings to continue to justify the high prices of these tech names. That is definitely a high expectation to meet." "However, DeepSeek has shown over the weekend with its updated AI model that is cost-effective with OpenAI's technology while running on reduced-capability chips, raising questions over the dominance of U.S. tech firms such as Nvidia Corp." RICHARD CLODE, TECH PORTFOLIO MANAGER, JANUS HENDERSON INVESTORS, LONDON: "DeepSeek appears to bringing some genuine innovation to the architecture of general purpose and reasoning models. Given compute restrictions in China it is not surprising that necessity drives innovation as we saw in Russia in the 1990s when limited access to PCs drove coding creativity and a generation of novel Russian coders." "As Yann LeCun (Meta's chief AI scientist) has noted, this is a victory for the open source model of driving community innovation with DeepSeek leveraging Meta's Llama and Alibaba's Qwen open source models." "However, DeepSeek is leveraging distillation techniques that are reliant on the work of others. How reliant is a key question the market is grappling with currently. Ultimately, we think that creates more questions around the direct monetisation of LLMs (large language models)and open source models than it does about AI capex. This announcement will also draw more scrutiny from the US around chip restrictions as well as the proliferation open source AI models." ALEXANDR WANG, CEO SCALE AI, (TWITTER POST) "DeepSeek is a wake up call for America, but it doesn't change the strategy: - USA must out-innovate & race faster, as we have done in the entire history of AI - Tighten export controls on chips so that we can maintain future leads Every major breakthrough in AI has been American." GEORGE LAGARIAS, INVESTMENT STRATEGIST, FORVIS MAZARS, LONDON: "China and DeepSeek say, at the very least, that they can deliver what ChatGPT can deliver today at a fraction of the cost," said George Lagarias, investment strategist at Forvis Mazars. "It makes sense that markets question the narrative that has been underpinning the whole market ... It's a very frothy market so it doesn't really take that much for investors to take some profit." BEN BARRINGER, TECHNOLOGY ANALYST, QUILTER CHEVIOT, LONDON: "DeepSeek's success will serve to intensify the US/China AI war, particularly following the recent announcement of the Stargate project in the U.S." "It also provides a wake up call and somewhat of a question mark on how much needs to be spent in order to build a model, and whether quite the level of CapEx we have been seeing is really required." "However, bringing the price of model training down is no bad thing as it will help to lower the entry point and this price elasticity could help drive usage and volume." (Reporting by the global finance and markets team, complied by Alun John; Editing by Dhara Ranasinghe)

DeepSeek buzz puts tech stocks on track for $1.2 trillion drop

What Bloomberg strategists say... "Magnificent Seven companies have lofty valuations and also a very high margin outlook. Cheaper AI could squeeze these profits in the longer term. ...Capital spending on AI will likely shape tech outlooks and may overshadow otherwise robust results." -- Heather Burke, Markets Live Editor, London. Full note here.Chinese AI-related stocks reacted positively, with mainland-listed Merit Interactive Co. among those surging by their daily limits. Merit is among those with the clearest links to DeepSeek after stating in an earlier filing that it had incorporated the homegrown AI firm's model into marketing. In Hong Kong, the Hang Seng Tech Index climbed as much as 2% ahead of Lunar New Year holidays this week.

U.S. stock markets tumble as investors worry about DeepSeek

China may be about to burst Silicon Valley's A.I. bubble -- and Wall Street is freaking out. U.S. tech stocks plunged on Monday, amid a wider market selloff. The culprit: DeepSeek, a Chinese artificial intelligence company that last week introduced a new -- and low-cost -- model into the red-hot A.I. tech market. DeepSeek on Monday morning became the most-downloaded free app on Apple's U.S. app store -- dethroning OpenAI's ChatGPT in the process. Shares of Nvidia, the chip company whose A.I. technology has made it into one of the most valuable companies in the world, dropped more than 13 percent by late morning on Monday. Rival chip companies, including Arm and Broadcom, also plunged, dragging down the major indices. The tech-heavy Nasdaq fell almost 600 points, or nearly 3 percent, by late morning. Google, Microsoft, Apple, Meta, and other big tech companies have poured billions of dollars into building up their artificial intelligence capabilities, fueling a Silicon Valley arms race. But now investors are calling these pricey investments into question: DeepSeek says it costs less to train its models, and its open-source A.I. assistant uses less advanced chips than rivals' models do. At least investors will soon get to grill Big Tech companies about DeepSeek and their overall A.I. strategies. Four of the so-called Magnificent Seven tech stocks -- Meta, Apple, Microsoft, and Tesla -- are all due to report quarterly results this week.

Nvidia's $465 Billion DeepSeek Rout Is Largest in Market History

(Bloomberg) -- Nvidia Corp.'s plunge, fueled by investor concern about Chinese artificial-intelligence startup DeepSeek, erased a record amount of stock-market value from the world's largest company. Nvidia shares tumbled as much as 13% soon after the opening bell Monday, erasing about $465 billion from the company's market capitalization. That eclipsed the previous record, a 9% drop in September that wiped out about $279 billion in value. Subscribe to the Bloomberg Daybreak podcast on Apple, Spotify or anywhere you listen. The drop rippled through the rest of the market due to how much weight Nvidia has in major indexes. Its previous drops have caused seven of the top ten biggest one-day drops in the S&P 500 Index, based on market value, according to data compiled by Bloomberg. The S&P 500 fell as much as 2.3% early Monday, while the Nasdaq 100 was down as much as 3.6%. The semiconductor maker is leading a broader selloff in technology stocks after DeepSeek's low-cost approach reignited concerns that big US companies have poured too much money into developing artificial intelligence, as the Chinese firm appears to provide a comparable performance to Western chatbots at a fraction of the price. The latest AI model of DeepSeek, released last week, is widely seen as competitive with those of OpenAI and Meta Platforms Inc. The open-sourced product was founded by quant-fund chief Liang Wenfeng and is now at the top of Apple Inc.'s App Store rankings. "Concerns have immediately emerged that it could be a disruptor to the current AI business model, which relies on high end chips and extensive computing power and hence energy," Jefferies analysts said in a note to clients. Nvidia has been the biggest beneficiary of the influx in spending on AI because they design semiconductors used by the technology. While that heavy spending looks poised to continue, investors may be more wary of rewarding companies that continue to spend without showing a return on the investment. Meta announced plans on Friday to boost capital expenditures on AI projects this year by about half to as much as $65 billion, sending shares to a record high. That came on the heels of OpenAI, SoftBank Group Corp. and Oracle Corp. announcing a $100 billion joint venture called Stargate to build out data centers and AI infrastructure projects around the US. In a bid to stall China's progress in AI, the US has banned the export of advanced semiconductor technologies to the country and is limiting sales of advanced Nvidia AI chips to others. ASML has never been able to sell its most-advanced extreme ultraviolet lithography machines to China because of US-led export restrictions. Last year, the Dutch government also restricted immersion deep ultraviolet lithography systems to China after pressure from the Biden administration. But DeepSeek's progress suggests Chinese AI engineers have found a way to work around the export bans, focusing on greater efficiency with limited resources.

China's Bargain-Basement DeepSeek Deep Sixes Artificial Intelligence Stocks on Wall Street

Investors question whether billions of dollars of investment in language models was too much too soon. Wall Street is rattled today by the possibility that billions of dollars planned and already invested in artificial intelligence hardware may have been misdirected. Nvidia, the leading supplier of computer chips for AI gear, slid 16.9%. That dragged down other AI hardware makers -- and perhaps unexpectedly utility companies -- but there were some winners too as investors rushed for safe havens amid the confusion. The angst came courtesy of a Chinese company called DeepSeek, whose R1 language model competes with OpenAI's ChatGPT, the market leader, at least until last week. What seems to have caught everybody's attention was the apparent disclosure that DeepSeek has produced a serious competitor to ChatGPT for $6 million, a piddling sum compared with the $500 billion that OpenAI coincidentally announced on Monday would be invested in building new American infrastructure over the coming four years in a project called Stargate. Other investors include Softbank and Oracle, and Nvidia, Microsoft, and Arm will provide technology backing. The $6 million figure is misleading. It comes from what DeepSeek termed a technical report about the third version of its language model. That report was released on December 26, and if one reads far enough one will find that it only includes the cost of training the third version of the model, leaving open the possibility that the total investment in "prior research and ablation experiments on architectures, algorithms, or data" was significantly higher. Still, it seems clear that DeepSeek is capable of producing a credible AI system for a fraction of the cost being committed in America, and unlike its increasingly proprietary rivals the Chinese program is open source. That means anybody can use it and make tweaks to improve or customize it, which would aid in its competitiveness versus ChatGPT, Meta's Llama, and Google's Gemini. DeepSeek used an approach called "mixture of experts" to cut the computing power needed to perform AI. This seems to be a case of necessity leading to invention because American export rules prevent the Chinese company from acquiring the most powerful Nvidia chips. Nvidia, which last week was the most valuable company in the world, ended up in third place after Monday's decline, according to CompaniesMarketCap, trailing Apple and Microsoft. Apple, which has had a rough start to the year as investors questioned its outlook for iPhone growth in China and lackluster AI offering, was up 3 percent but is still about 8 percent lower on the year. For the day, the blue-chip Dow Jones industrial average eked out a 0.7% gain, while the technology-laden Nasdaq composite was off 3%. The broader Standard & Poor's 500 split the difference with a 1.5% decline. Among the S&P's sectors, tech was down 4.9 percent and utilities fell 2.3 percent. High-performance computing, which includes support for power-hungry AI, has been supporting utility prices and capital spending. Meanwhile investors rotated into consumer staples, up 2.7 percent, and health care, which gained 2.3 percent.

DeepSeek's 'Sputnik moment' prompts investors to sell big AI players

Chinese AI startup DeepSeek launched a low-cost model, sparking investor fears of lower returns for Western AI companies like Nvidia and Oracle. DeepSeek's breakthrough, potentially achieved at a fraction of the cost of competitors, could disrupt the market and shift the global AI race. Investors hammered technology stocks on Monday, sending the likes of Nvidia and Oracle plummeting, as the emergence of a low-cost Chinese artificial intelligence model cast doubts on Western companies' dominance in this sector. Startup DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of incumbent players' models, possibly marking a turning point in the level of investment needed for AI. Futures on the Nasdaq 100 slid almost 4%, suggesting the index could see its biggest daily slide since September 2022 later on, if those losses are sustained. Those on the S&P 500 dropped 2%. Shares in AI chipmaker Nvidia fell 10%, rival Oracle dropped 8% and AI data analytics company Palantir lost 7% in pre-market trading. DeepSeek, which by Monday had overtaken U.S. rival ChatGPT in terms of downloads on the Apple Store, offers the prospect of a viable, cheaper AI alternative which has raised questions about the sustainability of the level of spending and investment on AI by Western companies, including Apple and Microsoft. From Tokyo to Amsterdam, shares in AI players tumbled. "We still don't know the details and nothing has been 100% confirmed in regards to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access," Jon Withaar, a senior portfolio manager at Pictet Asset Management, said. The hype around AI has powered a huge inflow of capital into the equity markets in the last 18 months in particular, as investors have bought into the technology, inflating company valuations and sending stock markets to record highs. Little is known about the small Hangzhou startup behind DeepSeek. Its researchers wrote in a paper last month that the DeepSeek-V3 model, launched on Jan. 10, used Nvidia's H800 chips for training, spending less than $6 million - the figure referenced by Pictet's Withaar. H800 chips are not top-of-the-line. Initially developed as a reduced-capability product to get around restrictions on sales to China, they were subsequently banned by U.S. sanctions. Sputnik moment Marc Andreessen, the Silicon Valley venture capitalist, said in a post on X on Sunday that DeepSeek's R1 model was AI's "Sputnik moment", referencing the former Soviet Union's launch of a satellite that marked the start of the space race in the late 1950s. "Deepseek R1 is one of the most amazing and impressive breakthroughs I've ever seen - and as open source, a profound gift to the world," he said in a separate post. In Europe, ASML which counts Taiwan's TSMC , Intel and Samsung as its customers, dropped almost 11%, while in Japan, startup investor SoftBank Group slid more than 8%. Last week it announced a $19 billion commitment to fund Stargate, a data-centre joint venture with OpenAI. Big Tech has ramped up spending on developing AI capabilities and optimism over the possible returns has driven stock valuations sky-high. Nvidia alone has risen by over 200% in about 18 months and trades at 56 times the value of its earnings, compared with a 53% rise in the Nasdaq, which trades at a multiple of 16 to the value of its constituents' earnings, according to LSEG data. Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore said the market was questioning the capex spend of the major tech companies. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management said: "The idea that the most cutting-edge technologies in America, like Nvidia and ChatGPT, are the most superior globally, there's concern that this perspective might start to change." "I think it might be a bit premature," Ichikawa said.

Nasdaq slumps on Chinese AI upstart, Nvidia loses some $400 bn in value

The tech-rich Nasdaq tumbled early Monday as traders around Wall Street and other global bourses reacted to the emergence of a low-cost Chinese generative AI venture that has apparently overtaken US companies. DeepSeek, which was developed by a start-up based in the eastern Chinese city of Hangzhou, has shown the ability to match the capacity of AI pace-setters such as Nvidia, which sank more than 11 percent Monday, giving up some $400 billion in market value. The tech-rich Nasdaq led major indices lower, falling 2.7 percent, with AI players Meta, Microsoft and Google parent Alphabet all firmly lower. DeepSeek said they spent only $5.6 million developing their model -- peanuts when compared with the billions US tech giants have poured into AI. US "tech dominance is being challenged by China," said Kathleen Brooks, research director at XTB. "The focus is now on whether China can do it better, quicker and more cost effectively than the US, and if they could win the AI race." Meta and Microsoft are among the tech giants scheduled to report earnings later this week, offering opportunity for comment on the emergence of the Chinese company, likened by venture capitalist Marc Andreessen to a "Sputnik moment," when the Soviet Union shocked Washington with its 1957 launch of a satellite into orbit. "DeepSeek's AI assistant is now the top-rated free application on Apple's US App Store," said a note from David Morrison, senior market analyst at FCA. "Investors have been forced to reconsider the outlook for capital expenditure and valuations given the threat of discount Chinese AI models. These appear to be as good, if not better, than US versions."

Nvidia, Microsoft shares tumble as China-based AI app DeepSeek hammers tech giants

The emergence of China-based AI app DeepSeek sent shares plummeting on Monday for many U.S. tech giants, including chipmaker Nvidia and AI-backer Microsoft. Nvidia, which helped catapult market wide gains in recent years, saw its share price plummet by more than 12% in early trading on Monday. Shares of Microsoft, a major stakeholder in ChatGPT-maker OpenAI, fell about 4.5%. The tech-heavy Nasdaq fell more than 3% in early trading on Monday. The Dow Jones Industrial Average and S&P 500 also inched downward. The DeepSeek chatbot -- which responds to user queries, just like its U.S.-based counterparts -- stands atop the Apple app-store charts. Early testing suggests that the quality of DeepSeek rivals that of U.S.-based AI products. Developers of the system powering the AI, called DeepSeek-V3, published a research paper indicating that the technology relies on much fewer specialized computer chips than its U.S. competitors. DeepSeek has emerged despite export controls issued by the Biden administration that prohibit U.S. manufacturers from selling such specialized chips to firms in China. Ivan Feinseth, a market analyst at Tigress Financial, described DeepSeek as "the first shot at what is emerging as a global AI space race." "The potential power and low-cost development of DeepSeek is calling into question the hundreds of billions of dollars committed in the U.S," Feinseth said in a note to clients on Monday. Alphabet, the company behind AI chatbot Gemini, saw shares drop about 3% on Monday. The stock price of Amazon, which offers its own AI-fueled shopping assistant, also fell about 3%. The dip interrupts a yearslong surge for many tech giants, driven in part by enthusiasm about the future of AI. The tech-heavy Nasdaq climbed more than 30% in 2024, sustaining much of its sky-high 43% growth over the year prior. Many analysts expected those robust gains to continue this year. "When expectations are high, one skeptical headline can knock the market off its axis. That's exactly what we're seeing today," Callie Cox, chief market strategist at Ritholtz Wealth Management, said in a statement on Monday.

How the buzz around Chinese AI model DeepSeek sparked a massive Nasdaq sell-off

A young Chinese AI startup DeepSeek sparked a massive rout in U.S. technology stocks on Monday as its highly competitive -- and potentially shockingly cost-effective -- models stoked doubts about the hundreds of billions that America's biggest companies are spending on artificial intelligence. DeepSeek's emergence is shaking up investor confidence in the AI story that has been lifting the U.S. bull market the past two years. It calls into question the hype around Nvidia's chips and rippled all the way through the market to hit shares of power producers who were set to get a boost from AI data center demand. Here's how the DeepSeek-triggered market sell-off on Wall Street unfolded: DeepSeek was founded in May 2023 by Liang Wenfeng, who partly funded the company by his AI-powered hedge fund. In late December, the AI developer launched a free, open-source large language model that it says took only two months to develop and less than $6 million to build. On Jan. 20, the Hangzhou, China-based DeepSeek released R1, a reasoning model that outperformed Open AI's latest o1 in many third-party tests. DeepSeek is seeking to differentiate from its competitors with its reasoning capabilities, meaning that before delivering the final answer, the model first generates a "chain of thought" to enhance the accuracy of its responses. The buzz around DeepSeek's R1 seemingly picked up steam after Alexandr Wang, CEO of ScaleAI, touted its competitiveness against the best products from the U.S. megacap tech giants, which most had thought were leading the AI war. "What we found is that deep seek, which is the leading Chinese AI Lab, their model, is actually the top performing, or roughly on par with the best American models," Wang, whose company provides data to help companies train their AI tools, said on CNBC from the World Economic Forum in Davos, Switzerland last week. Wang noted that DeepSeek actually has more H100 chips from Nvidia than expected -- about 50,000 of them. Those chips are the processor of choice for AI firms in the U.S. such as OpenAI and the U.S. has banned the sale of advanced AI chips to China. Nvidia shares took a 3% hit on Friday as chatter about DeepSeek started to pick up. But it wasn't until the past weekend when the hype surrounding DeepSeek reached a fever pitch on social media. Marc Andreessen, co-founder and general partner of venture capital firm Andreessen Horowitz, sang DeepSeek's praises on X, saying the R1 model is "one of the most amazing and impressive breakthroughs" he's ever seen. Andreessen's portfolio includes Airbnb and dozens of AI companies. Tech investor Chamath Palihapitiya on X pointed to DeepSeek's "very good" report, which said its R1 model "essentially cracked one of the holy grails of AI: getting models to reason step-by-step without relying on massive supervised datasets."

Nvidia shares drop up to 7%, Nasdaq futures slide 4.3% as DeepSeek sparks global tech rout

Nvidia, hailed as the AI boom's poster child with a 196% gain in 2024, now faces rising scrutiny. DeepSeek's low-cost, open-source model challenges the industry's dependence on premium chips and expensive AI ecosystems, posing a threat to Nvidia's dominance and raising questions about the sustainability of its leadership in the rapidly evolving AI landscape.Tech-heavy Nasdaq futures, European tech shares, and Asian markets outside China tumbled on Monday, led by an up to 7% fall in Nvidia shares, as a disruptive low-cost AI model from China's DeepSeek threatened to upend the profitability of big tech and artificial intelligence firms and their reliance on high-cost chipmakers. The selloff, sparked by fears over diminishing returns for AI sector investments, dragged down Nasdaq 100 futures by 4.3% and S&P 500 futures by 2.4%. Shares of Nvidia, a key beneficiary of the AI boom, slid up to 7% in Frankfurt trading, while Tesla, Amazon, and Meta fell more than 2% each in early European trading. Nvidia, once the poster child of the AI boom with a 196% gain in 2024, now faces heightened scrutiny as DeepSeek's low-cost, open-source approach challenges the industry's reliance on premium chips and high-cost AI ecosystems. European markets joined the rout, with the pan-European STOXX 600 index down 0.7% and tech stocks plunging 4.5%. Meanwhile, Asian shares outside China were not spared, as Japan's Advantest, a supplier to Nvidia, plummeted 8.5%, and chip-making giant Tokyo Electron lost 5%. In India, tech stocks were also in a bloodbath, with the Nifty IT benchmark sinking 3.3% on Monday. Shares of Netweb Technologies, an Indian AI infrastructure player, plunged as much as 13% to Rs 1,605 on the BSE, mirroring the global selloff. The company, which derives about 15% of its operating revenue from its AI segment, has positioned itself as a significant player in the AI ecosystem through an OEM partnership with Nvidia. This collaboration involves designing advanced GPU systems on Nvidia's Blackwell GB200 platform -- a key driver of its growth strategy in AI. However, the disruptive potential of DeepSeek has cast doubt on the viability of high-cost AI ecosystems. The market turmoil was triggered by Hangzhou-based DeepSeek, which launched a free AI assistant designed to rival OpenAI's ChatGPT. Its DeepSeek-V3 model, released on January 10, uses lower-cost Nvidia H800 chips and requires minimal data, with training expenses reportedly under $6 million. This contrasts sharply with the capital-intensive strategies of AI leaders, raising fears of shrinking margins and cooling demand for high-tech chips and data centers. Asian markets outside China mirrored the downturn. Malaysian utility and data center player YTL Power dropped 7% to a two-month low, and other AI infrastructure-related stocks in the region faced sell-offs. Meanwhile, in China, the CSI300 AI index dropped 2.2%, though big data stocks gained 4% amid mixed sentiment. European tech shares bore the brunt of the selloff, with Dutch chip equipment maker ASML tumbling 8.7%. Siemens Energy, a key supplier to AI infrastructure, sank 17.7%, while Schneider Electric dropped 8.1%. Also read | DeepSeek's threat sends Netweb Technologies shares plummeting 13% (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Nvidia, Broadcom Among Tech Stocks to Sink on DeepSeek Threat

Broadcom's shares slumped around 17%, while Micron Technology was down around 11%. A slew of stocks, including chip maker Nvidia (NVDA), fell Monday after Chinese startup DeepSeek released a cutting-edge artificial intelligence model that runs on less-advanced chips and at a lower cost than those of U.S. rivals like OpenAI. The Chinese company's launch is raising questions about tech shares being overvalued and that Big Tech is overspending on their AI buildout. DeepSeek's app was a top downloaded app on the Apple store in the U.S. Monday afternoon. (Here's more on what you need to know about DeepSeek.) DeepSeek earlier this month said its performance was "on par with ChatGPT." DeepSeek's success has come despite U.S. export controls on cutting-edge chips that have hampered Chinese AI companies. Nvidia fell more than 16% Monday, while U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) were down 13% and ASML Holding (ASML), the Dutch company that makes semiconductor-making equipment, fell about 6%. In a note published Sunday Jan. 26, Citi analysts said they were sticking with a buy rating on Nvidia, and expected AI companies to continue buying advanced chips. "While DeepSeek's achievement could be groundbreaking, we question the notion that its feats were done without the use of advanced GPUs to fine tune it and/or build the underlying [large language model] the final model is based on through the Distillation technique," the analysts wrote. "While the dominance of the US companies on the most advanced AI models could be potentially challenged... we estimate that in an inevitably more restrictive environment, US' access to more advanced chips is an advantage," they added. Update: This story has been updated to reflect fresh share-price information.

Markets latest: Wall Street tech stocks head for $1tn sell-off as DeepSeek rattles investors

Tech stocks tumble as China's DeepSeek sows doubts about AI spending Tech stocks tumbled on Monday as advances by Chinese artificial intelligence start-up DeepSeek cast doubt on whether the US could sustain its leadership in AI by spending billions of dollars on chips. DeepSeek last week released its latest large language AI model, which achieved a comparable performance to those of US rivals OpenAI and Meta but claims to use far fewer Nvidia chips. The results sent a shockwave through markets on Monday, with Nvidia on course to lose more than $300bn of market value, the biggest recorded drop for any company, as investors reassessed the likely future investment in AI hardware.

DeepSeek: US tech stocks tumble on fears of cheaper Chinese AI

US tech firms exposed to big artificial intelligence (AI) investments are seeing their shares take a hammering over the emergence of a low-cost Chinese competitor. The likes of Nvidia, Meta Platforms, Microsoft and Alphabet all saw their stocks come under pressure as investors questioned whether their share prices, already widely viewed as overblown following an AI-led frenzy, were justified. Some market analysts put the combined losses in market value, across US tech, at more than $1trn (£802bn). Money latest: Cost of European holidays surge Leading AI chipmaker Nvidia's shares bled 11% in early Wall Street dealing alone, while the tech-focused Nasdaq slid by more than 3%. The declines were all put down to the emergence late last week of a Chinese AI chatbot that uses lower-cost chips. Start-up DeepSeek launched a free assistant that, it said, uses less data at a fraction of the cost of incumbent players' own large language assistants. Brian Jacobsen, chief economist at Annex Wealth Management, said the claims had placed in doubt the market's AI-led dominance of the past two years that have seen AI-linked stocks repeatedly hit new highs. He said of the repercussions: "It could mean less demand for chips, less need for a massive buildout of power production to fuel the models, and less need for largescale data centers. "However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications", he added. DeepSeek's AI assistant is certainly proving popular, becoming the top-rated free application available on Apple's App Store in the US after overtaking ChatGPT. DeepSeek has even attracted praise from US rivals for the assistant's performance despite questions continuing to swirl over the 2023-founded company's technological development. It was achieved despite tech export controls, designed to protect US patents, imposed on China by president Joe Biden in 2021. The share price movements will likely be of concern to his successor in the White House, Donald Trump, who has long accused Chinese firms of profiting from US technology. Read more from Sky News: Ryanair profits nearly 10 times higher Hobbycraft owner circles WH Smith It also remains to be seen whether he will see the competition as aggressive towards US firms, having already indicated he is minded to allow Chinese-owned TikTok to escape a US ban but through shared ownership to help offset national security concerns. Russ Mould, investment director at AJ Bell, said: "The US government - both under Donald Trump and previously under Joe Biden - have been trying to stop China from accessing Western technology. "That strategy might have backfired as it looks to have encouraged China to ramp up efforts to build its own technology and we're now seeing evidence that the country is making waves." Market experts said AI customers could ultimately benefit from a share price bounce once the market settled due to improved competition bringing down prices. Away from the United States, another company licking its wounds on Monday was SoftBank, the Japanese investment firm. Its shares were 8% down on the day, erasing all the gains seen since last week when Mr Trump announced SoftBank was part of an investment of up to $500bn in US AI infrastructure.

CNBC Daily Open: Nvidia plunges as DeepSeek triggers questions on its value

DeepSeek raises questions on AI investments Chinese AI startup DeepSeek on Monday released its reasoning model R1, which rivals OpenAI's o1. Its main claim to fame is that the model was built with chips less powerful than those U.S. AI firms use and could have cost less than 10% of Meta's Llama, according to estimates by Jefferies analysts. That fanned fears that the huge investments into AI by U.S. firms are unwarranted and a bubble waiting to pop. Energy shares fizzle out Power companies most exposed to the tech sector's data center boom plunged Monday, as DeepSeek's claims led investors to question how much energy artificial intelligence applications will actually consume. Vistra closed nearly 30% lower while Talen Energy and GE Vernova tumbled more than 20%. All three stocks gave up this year's gains. Tech shares battered Major U.S. benchmarks fell Monday on a broad retreat by semiconductor and AI-related stocks, though the Dow Jones Industrial Average managed to advance. The pan-European Stoxx 600 index ticked down 0.07%, recovering from steep losses earlier. But stocks with ties AI, such as Siemens Energy and Schneider Electric, ended the day sharply lower. [PRO] Nvidia sell-off an 'overreaction': Tom Lee Nvidia's slump is "an overreaction" at a scale close to the 2020 pandemic-sparked sell-off, Tom Lee, head of research at Fundstrat Global Advisors, told CNBC. Here's why Lee isn't changing his mind on Nvidia for now.

Nvidia drops $600bn off its market cap amid the rise of DeepSeek

DeepSeek, a Chinese AI startup, became the talk of the proverbial AI town when it released its R1 model on Friday. R1's functionality and accuracy compared to its U.S. counterparts, despite using less resources and less compute power, seems like a win for the overall AI industry. But it isn't necessarily a good news for everyone. Semiconductor giant Nvidia finds itself in the headwinds of DeepSeek's recent achievement. The chip giant saw its stock plummet 16.9% from the close of Friday's public markets to the close of public markets on Monday, according to Yahoo Finance data. Nvidia lost nearly $600 billion off of its market cap. Nvidia's stock closed at $142.62 a share on Friday afternoon. On Monday, it closed at $118.58. There is speculation that the reason why DeepSeek's model release would impact Nvidia's stock is that R1 provides a clear example that AI models don't necessarily need expensive, high-end chips or hardware to build an impressive model, which isn't exactly great news for a chipmaker like Nvidia. "DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling," an Nvidia spokesperson told TechCrunch over email. "DeepSeek's work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant. Inference requires significant numbers of Nvidia GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling." The timing of all of this is interesting because this comes one week after former President Joe Biden signed an executive order that made further restrictions on the export of U.S.-produced advanced AI chips to certain countries, with near-blanket restrictions on sending chips to countries like China where DeepSeek is based. At the time, Nvidia said that the executive order was "unprecedented and misguided" and that it would "derail" innovation and economic growth worldwide. President Donald Trump has since reversed Biden's executive order and has signed a different executive order to create the Stargate Project, an infrastructure program that will invest up to $500 billion into AI data centers. The release of DeepSeek shows that if the U.S. wants dominance over the global AI market, it may need to pay attention to more than just chips and AI hardware.

NVIDIA Sheds $384 Billion In Value Within Hours As China's DeepSeek Shocks Western Markets

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Chip designer NVIDIA Corporation's shares shed more than $300 billion in value in premarket trading today as investors speculated about the implications of Chinese artificial intelligence startup DeepSeek being able to train models on par with their American counterparts at a lower budget. DeepSeek's R1 model made a splash earlier this month to quickly become the most downloaded application on Apple's AppStore over the weekend. NVIDIA's shares were down by 11% in premarket trading as they joined peers from Japan and European chip equipment manufacturer ASML to report low single-digit percentage share price losses. Today's stock market selloff, which started soon after trading opened in Japan, affected data center stocks in the Asian country, the shares of chip manufacturing equipment provider ASML and NVIDIA. It was also reflected in the NASDAQ's futures and the VanEck Semiconductor ETF. ASML, which is highly exposed to the global semiconductor industry due to its status as the sole provider of advanced EUV chip manufacturing machines, saw its shares tumble by a whopping 11% in Europe ahead of its crucial earnings report due later this which will set the pace for 2025 AI expectations. The stock had already bled 22% in October last year when the firm guided weak equipment demand for 2025 and caused investors to price out some of their AI-related demand expectations. ASML's ADRs that trade on the NASDAQ exchange are down by 11% in premarket trading to remove roughly $30 billion from its valuation. Over the past six months, the ADRs are down by 16% excluding today's premarket losses. Japanese investment conglomerate Softbank, which sought to create headlines earlier this month through President Trump's $500 billion AI initiative, was down by 8.32% in Japanese markets. Chip testing equipment manufacturer Advantest also slid by 8.6%. Yet, due to its massive market valuation that made it the most valuable company in the world last week, NVIDIA's market cap has taken the hardest hit from the DeepSeek fallout. Its shares have lost roughly 11% in premarket trading to wipe out a stunning ~$384 billion in value from where it last stood as trading closed last week. NVIDIA's shares traded in Germany are down by an even larger 11.7%. After NVIDIA, one of the worst-hit chip stocks is semiconductor designer Broadcom. Its shares had soared by an unbelievable 38% in December when management shared that the firm expects to earn tens of billions of dollars through AI chip sales in 2027. However, as investors ponder whether the demand for AI chips will actually materialize given the currently held beliefs surrounding DeepSeek's training resources, they are fleeing Broadcom's stock in droves. Its shares are down by 10.5% in premarket trading to remove roughly $100 billion from its Friday valuation. NVIDIA's smaller rival, AMD, is also down by 5.3% in the premarket. While AMD's products, namely its accelerators, are also suitable for AI workloads, NVIDIA's GPUs are the industry leaders and see the highest demand. British chip design house Arm Ltd, whose CEO Rene Haas insisted multiple times earlier this month that his firm's CPUs are alongside all AI GPUs, has shed 9.43%. Other losers include Microsoft Corporation and Facebook's parent company, Meta. Their shares are down by 6% and 4.6% with investors pondering about the wisdom behind their multi-billion dollar capital expenditures. Shares of consumer technology giant Apple, which is only expected to benefit from consumer AI, are unfazed and have lost a mere 0.9% in premarket trading.

China's 20x cheaper AI just triggered a tech stock meltdown

Asian technology stocks fell sharply Monday as Chinese AI startup DeepSeek sparked sector-wide concerns about artificial intelligence investment sustainability and pricing pressures, triggering selloffs in chip-related shares while boosting some Chinese tech giants. Japanese chip equipment manufacturers bore the brunt of selling, with Disco Corp dropping 2.6% and Advantest plunging 8.8%. China's top chipmaker SMIC declined 2.9%, mirroring pre-market weakness in Nvidia shares after U.S. trading signals. The selloff followed DeepSeek's launch of its R1 model last week -- a ChatGPT competitor that venture capitalist Marc Andreessen called "AI's Sputnik moment" on X, referencing the Soviet satellite that triggered the space race. Tokyo Electron and Fujikura saw concentrated selling after months of AI-driven gains, with Furukawa Electric plummeting 11.3% -- the worst performer in Japan's Nikkei 225. The cable manufacturer had surged since November due to data center demand before Monday's reversal. A Tokyo-based fund manager linked the tech rout to recalculated AI hardware expectations: "The market was readjusting to the idea that hardware spending on AI could be a lot lower than current estimates." How to setup DeepSeek-R1 easily for free (online and local)? Japan's Topix index rose 0.2% as investors reacted to the Bank of Japan's 0.25% rate hike last week. Shares of Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group all climbed about 1% on expectations of improved lending margins. This contrasted with the tech-heavy Nikkei's performance, highlighting sector-specific impacts from the AI news. Bernstein analysts revealed Sunday that DeepSeek's models undercut OpenAI by 20-40 times on pricing. The Chinese firm charges $0.55 per million tokens for its Reasoner model compared to OpenAI's $15 for equivalent usage of its o1 model. Tokens -- the basic units AI uses to process text, equivalent to about three-quarters of a word -- have become a key cost metric in generative AI operations. DeepSeek's open-source approach contrasts sharply with OpenAI's closed system, with Bernstein noting the development "brings up very interesting questions about the viability of proprietary versus open-source efforts." The pricing gap coincides with DeepSeek topping U.S. App Store downloads ahead of ChatGPT, despite being a relatively unknown Chinese startup until recently. Barclays' Mitul Kotecha highlighted market surprise at China's tech advancements: "The fact they're able to achieve high-end tech has caught a lot of people by surprise... this seems to be what's driving the shift in sentiment today." The comments follow U.S. efforts to restrict Chinese access to advanced semiconductor technology through export controls. Hong Kong's Hang Seng Index gained 0.9% led by Tencent (+1.2%) and Alibaba (+0.8%), while Chinese AI specialist iFlytek rose 1.75%. The divergence reflects both DeepSeek's domestic success and lingering questions about global AI infrastructure needs. U.S.-listed Chinese tech stocks showed early strength in pre-market trading despite the semiconductor sector's woes. A dealer at a major Japanese brokerage noted conflicting market signals: "It's hard to say how long the pain will last... some clients are using the DeepSeek news as an excuse to lock in profits on stocks that had performed well since January." Traders await U.S. market opens for clearer direction, with Nvidia's performance seen as a key bellwether. DeepSeek claims its competitive models were developed on a "bootstrapped budget," challenging assumptions that AI leadership requires massive capital expenditures. This assertion comes as global tech firms have committed billions to AI chip clusters and data centers, with Nvidia's market value surpassing $3 trillion earlier this month. The startup's rapid ascent -- from obscurity to topping app charts and rattling global markets within days -- has intensified debates about AI development costs. Bernstein's analysis suggests DeepSeek's pricing could force industry-wide margin compression, particularly for companies relying on proprietary model revenue.

Asia tech stocks fall as DeepSeek sows doubts about AI spending

Asian technology stocks fell on Monday following concerns over global artificial intelligence investment and the impact of Chinese start-up DeepSeek. Japanese chip companies Disco Corp and Advantest, an Nvidia partner, were down 2.9 per cent and 8.1 per cent respectively, while China's leading chipmaker SMIC declined 2.5 per cent. Overnight trading in the US indicated that AI bellwether Nvidia was poised to open down on its Friday close. The declines come as markets digested the unexpected advances by Chinese AI company DeepSeek, which released its R1 model last week, casting doubt on Silicon Valley's hefty AI capex spending and the sustainability of the US technical edge in artificial intelligence. "DeepSeek R1 is AI's Sputnik moment," venture capital investor Marc Andreessen wrote on social media site X, comparing the release with the wake-up call of the Soviet Union's success of putting the first satellite into orbit. DeepSeek hit the top of the App Store download charts in the US on Monday. The small start-up has claimed to be building competitive models on a bootstrapped budget, causing industry insiders to question whether it was necessary to pour tens of billions of dollars into building AI chip clusters for large language model training. "It seems as if there is a bit of reality dawning that China has not been sitting idle, even as these tariffs and investment restrictions on tech companies have been put in place", said Mitul Kotecha, head of EM macro and FX at Barclays. "The fact they're able to achieve high-end tech has caught a lot of people by surprise . . . this seems to be what's driving the shift in sentiment today." Hong Kong's Hang Seng index was up 1.1 per cent by midday on Monday, led higher by the Chinese tech companies listed in the territory including Tencent and Alibaba. China AI company iFlytek was up 2.4 per cent. Traders in Tokyo said Monday's selling had been tightly focused on stocks such as Tokyo Electron and Fujikura, which have surged in recent months due to their high exposure to AI investment. "It's DeepSeek for sure," said one Tokyo-based fund manager of the sudden drop in Japanese tech shares, adding that the market was readjusting to the idea that hardware spending on AI -- a theme that had benefited certain Japanese companies -- could be a lot lower than current estimates. Furukawa Electric, which makes wire cables for data centres, had seen particularly sharp gains since November, but its shares tumbled by more than 9 per cent on Monday, making it the biggest percentage loser in the benchmark Nikkei 225 Average. A dealer at one of Japan's biggest brokerages said it was hard to say how long the pain would last, and whether it was the start of a bigger sell-off. Tokyo's markets were expected follow those in US when the latter open later in the day, the person said, but they added that some clients were using the DeepSeek news as an excuse to lock in profits on stocks that had performed well since the start of the year. Others noted that the sell-off in big Japanese tech stocks was triggering a broader rout in Japanese stocks. The Topix rose on Monday morning, as the market reacted to last week's 0.25 per cent interest rate rise by the Bank of Japan. Shares in Japan's three biggest banks -- MUFG, SMFG and Mizuho -- all climbed about 2 per cent on expectations that increasing interest rates will produce stronger domestic profits.

Chinese AI Firm DeepSeek Deep-Sixes US Tech Stocks | PYMNTS.com

Tech stocks plunged Monday (Jan. 27) following a new AI model from China's DeepSeek. As the Financial Times (FT) reported, DeepSeek's latest large language artificial intelligence (AI) model has sowed doubt about the U.S.'s ability to maintain its position as AI leader by spending billions on chips. The new DeepSeek model achieved a comparable performance to those of U.S. rivals OpenAI and Meta but reportedly claims to use substantially fewer Nvidia chips. This news rocked markets Monday. Nvidia was on track to lose more than $300 billion in market value, the FT said -- the largest recorded drop for any company -- with investors reconsidering the need to invest in AI hardware. "DeepSeek R1 is AI's Sputnik moment," venture capital investor Marc Andreessen wrote on X, an apparent reference to the Soviet Union's early space race victory in 1957, prompting the U.S. to create NASA. As of Monday morning, DeepSeek's new AI model had supplanted OpenAI's ChatGPT as the most popular free app on the Apple App Store, per a separate report by Reuters. The FT report notes that the stock rout included companies such as Microsoft and Meta, as well as firms beyond the traditional tech sector. For example, Siemens Energy, which provides electrical hardware for AI infrastructure, fell 22%. "It's DeepSeek for sure," said one Tokyo-based fund manager in reference to the sell-off, adding that investors were scrambling to determine whether hardware spending on AI could ultimately be much lower than current projections. The report, citing figures from UBS, said AI investment by large-cap tech companies in the U.S. reached $224 billion in 2024, with that number expected to climb to $280 billion this year. Last week, OpenAI, SoftBank and Oracle announced they would invest $500 billion over the next four years in AI infrastructure, a joint venture dubbed "Stargate." "It shows how vulnerable the AI trade still is, like every trade that is consensus and based on the assumption of an unassailable lead," Luca Paolini, chief strategist at Pictet Asset Management, told the FT. The news comes amid a changing AI landscape in the U.S., with President Donald Trump last week repealing predecessor Joe Biden's 2023 AI regulations on his first day in office last week. "Trump's reversal marks a significant policy shift that is lighter on regulations and guardrails and more pro-growth and pro-innovation," PYMNTS wrote. "However, it is unclear how his repeal of Biden's executive order will be enacted on the grounds that federal agencies that already have instituted such policies. Notably, Trump established the first executive order on AI during his first term in office."

DeepSeek sparks global AI selloff, Nvidia sinks 17%

STORY: The S&P 500 and the Nasdaq ended lower on Monday as Nvidia and other chipmakers sold off after surging popularity of a low-cost Chinese artificial intelligence model raised investor worries about the outlooks for current AI leaders in the United States. Chinese startup DeepSeek rolled out a free assistant it says uses cheaper chips and less data, raising questions about investor expectations that AI will drive demand along a supply chain from chipmakers to data centers. Nvidia plunged about 17%, shaving nearly $600 billion off its market valuation, while an index of semiconductor stocks had its biggest single-day percentage decline since March 2020. But the Dow actually rose about two thirds of one percent, while the S&P 500 dropped about one and a half percent and the Nasdaq fell three percent. Despite the big moves in the red for some stocks, Zacks Investment Research Client Portfolio Manager Brian Mulberry sees encouraging signs. "Well, in the market today, you know, we're seeing it across kind of the different indices, a very different experience. Nasdaq down sharply. The S&P kind of in the middle and the Dow turning slightly positive. If I pivot that and talk about just growth and value, growth down sharply, but value is actually up over a percent on the day, in particular, large cap value, What does that mean? Investors are coming back to, I think, a little bit more common sense valuations, but also very strong, very healthy balance sheets." Other stocks on the move included AT&T which jumped 6% to a 3 ½ year high after its fourth-quarter wireless subscriber growth surpassed expectations. And shares of Ralph Lauren slipped three percent after brokerage Raymond James cut its rating to market perform, citing the huge rally in the stock which surged 60% last year and has gained another 11% so far in 2025.

The Nasdaq sinks more than 800 points as a China AI threat sparks a huge tech stock sell-off

Nasdaq futures slipped 4% in Monday pre-market trading as a perceived threat from Chinese artificial intelligence startup DeepSeek prompted a global sell-off of tech stocks. Dow Jones Industrial Average futures, an index of 30 of the largest U.S. companies including Nvidia (NVDA), were also down more than 300 points as of Monday morning. S&P 500 futures tumbled 2%. The tech-heavy Nasdaq -- which has been significantly boosted by AI hype -- is especially susceptible to any investor concerns, especially when it comes to AI. And the rise of any competitor to U.S. dominance in the space, especially one that uses less energy and has less of a need for high-end chips, can cause fears to spike. DeepSeek in December launched a free, open source large language model (LLM), which it claimed it had developed in just two months for less than $6 million. Last week, the company said it launched a model that rivals OpenAI's ChatGPT and Meta's (META) Llama 3.1 -- and which rose to the top of Apple's (AAPL) App Store over the weekend. Most notably, DeepSeek built the model using lower capability chips from Nvidia, which could put pressure on the semiconductor darling if other firms move away from its premium offerings. Read more: Nvidia stock plunges 14% as a big advance by China's DeepSeek rattles AI investors Analysts at Wedbush said in a research note Monday that "tech stocks are under massive pressure led by Nvidia as the Street will view DeepSeek as a major perceived threat to U.S. tech dominance and owning this AI Revolution." The sell-off was led by Nvidia, whose stock fell as much as 14% Monday morning. Other major chip stocks also sank, including ASML (ASML), which fell 7%, and Broadcom (AVGO), which took a 12% dip. Taiwan Semiconductor Manufacturing Co. (TSM), the world's largest chipmaker, saw its shares sink 11%. "U.S. tech companies are trading at premium valuations, with major AI players like Nvidia, Microsoft (MSFT), and Alphabet (GOOGL) commanding forward [price-to-earnings] multiples far above historical averages," said Charu Chanana, chief investment strategist at investment platform Saxo, in a statement. "With these stocks priced for perfection, even minor disruptions, such as DeepSeek proving advanced AI can be built without top-tier chips, could weigh heavily on share prices." Analysts at Wedbush said DeepSeek is not yet a real threat to U.S. hyperscalers, and could prompt further capital expenditure from major firms like Amazon (AMZN), Alphabet, and Microsoft.

DeepSeek's Open-Source AI Costs NVIDIA $600 Billion, Triggers $1 Trillion Sector Slump - Decrypt

Nvidia's stock plunged Monday, losing $600 billion in market value -- the largest single-day market cap loss in history -- as global attention turned to Chinese AI startup DeepSeek. The tech giant's stock began the day trading at $140 but fell 16% and closed at $118 as news of DeepSeek's low-cost AI developments and high-performance spread. Its plunge reflects a broader trend, with the U.S. tech industry shedding an estimated $1 trillion in market capitalization and those concerns spreading to other areas of the economy, including crypto. DeepSeek's ability to outperform OpenAI's o1 while operating at a significantly lower cost, reportedly under $5 million, has rocked the tech industry, which has prioritized computational power over efficiency. Its success has propelled DeepSeek to become the top free app in the U.S., according to Appfigures' data. Another factor fueling the sell-off is claims that Chinese developers are training their AI models on Nvidia H100 chips that the U.S. barred Nvidia from selling to them, raising questions about the effectiveness of U.S. export controls and China's access to advanced hardware. "The Chinese labs, they have more H100s than people think, you know," Scale AI CEO Alexandr Wang told CNBC. "My understanding is that DeepSeek has about 50,000 H100s, which they can't talk about, obviously, because it is against the export controls that the U.S. has put in place." The U.S.'s reluctance to embrace open-source AI development may have given Chinese companies an edge in the AI development field, according to Professor Ion Stoica, a computer scientist at UC Berkeley and co-founder of Databricks and Anyscale, citing regulatory concerns and national security fears. "When I say open source, I mean open data, open training algorithms, open weights, and open evaluations -- maximum visibility into how they're trained and what they're trained on," Stoica told Decrypt. "Now we're in a situation where Chinese companies bet on open source, unlike the U.S., and are clearly ahead." While Stoica declined to speculate on the tech stock market, he emphasized the transformative potential of lower AI model costs. "If the cost of building or serving these models drops by 10 or 100x, it could hurt these companies," he said. "On the other hand, if it drives innovation and accelerates AI development by doing more with the same hardware, these companies could become even more valuable.

DeepSeek's emergence could call U.S. tech's 'stratospheric valuations' into question, says Deutsche Bank

The emergence of a new AI model from China has investors rethinking their outlook for chip stocks, and maybe regretting the sky-high valuations they've been willing to pay. The iShares Semiconductor ETF (SOXX) fell more than 6% in morning trading Monday. Nvidia , Marvell Technology and U.K.-based Arm Holdings were among the chip names suffering even bigger sell-offs. SOXX 1D mountain Chip stocks fell sharply on Monday. The market rout comes as many chip stocks have been trading at valuations far above both the S & P 500 and the industry's historical trend. Deutsche Bank's strategist Jim Reid said in a note to clients that the valuation of many U.S. tech stocks is "stratospheric," and there are many chipmakers trading at higher valuations than the more established and well-rounded members of the "Magnificent Seven" like Apple or Meta Platforms . Nvidia, for example, entered Monday with a stock price roughly 56-times its trailing 12 months earnings. Advanced Micro Devices had a price-to-earnings ratio in the triple digits. And Marvell had a market cap of more than $100 billion despite losing money. Of course, investors care more about future profits than past ones. The growth rate of Nvidia in particular has been so dramatic that investors are willing to pay up for what appeared to be one of the biggest trends in the global economy. "It's gone from LTM earnings of around $4bn two years ago to around $63bn in the last quarterly release. For context, this is around half the total earnings made by listed stocks in each of UK, Germany and France over the last 12 months," Reid said in the note. The real issue of the emergence of DeepSeek AI is that it potentially means the rapid growth of demand for semiconductors will slow. Chipmakers have been racing to develop more high-powered chips, and corporate customers have been lining up to buy as many as they can. But if the newest AI models can operate with significantly less computing power, that projected demand could dry up. "The problem is that the AI industry is embryonic. And it's almost impossible to know how it will develop or what competition current winners might face even if you fully believe in its potential to drive future productivity. The stratospheric rise of DeepSeek reminds us of this," Reid said.

DeepSeek's Cost-effective AI Model Casts Doubts on High Valuations of Companies Like Nvidia

Tencent, Alibaba and Baidu saw stock gains, while Japanese chipmakers faced losses on Monday. DeepSeek's cost-effective AI model, using less advanced chips, is challenging Nvidia's dominance, driving declines in artificial intelligence (AI) stocks. The tech firm has sparked optimism in Chinese tech firms like Tencent, Alibaba and Baidu. At the same time, Japan's chipmakers face rising competition as China accelerates AI advancements. Buzz has been growing over DeepSeek's cost-effective AI model, which runs on less advanced chips, raising doubts about the high valuations of companies like Nvidia, which have been central to the AI boom. DeepSeek's model, competitive with offerings from OpenAI and Meta, has gained attention for its transparency, quickly reaching the top of the App Store. This has led to a decline in AI-related stocks, including Nvidia, as investors reconsider the energy and computing power required for AI. DeepSeek's success challenges the assumption that China's AI tech is years behind the U.S., as it uses open-source technology that's widely accessible. "DeepSeek is going to challenge Silicon Valley's leadership, disrupting the global tech landscape and reshaping the direction of the AI arms race. The launch of this innovation underscores a historic pivot in the balance of technological power. U.S. Big Tech, long considered untouchable, is facing credible and intensifying competition from China," deVere Group CEO, Nigel Green, opined. Leading Chinese internet stocks, including Tencent, Alibaba and Baidu, saw gains fueled by speculation around AI startup DeepSeek's advancements. Investors are optimistic that the mentioned companies will collaborate with DeepSeek, enhancing their global competitiveness. Tencent shares rose by 1.3%, Alibaba gained 3.5% and Baidu increased by 4.2%, respectively. This reflects positive sentiment toward China's growing AI capabilities. Green said, "For investors, this is both a warning and an opportunity. It's time to rethink traditional tech allocations and seek out new areas of growth." Susannah Streeter, head of money and markets at Hargreaves Lansdown, focuses on the importance of DeepSeek's model for Asian tech firms. "DeepSeek threatens to spook big tech and has already sent shivers through Silicon Valley by releasing details about how to build large language models more cheaply using low-cost Chinese chips," she said. "While they don't offer the cutting-edge tech of Nvidia's graphics processing units, the efficacy of the budget version and the willingness of DeepSeek to share its know-how may start to chip away at Nvidia's dominance. DeepSeek has access to deep wells of Chinese data and has deep pockets," she continued, adding: "While Nvidia latest chips are still far superior in terms of performance, with cheaper rivals making progress, there is likely to be a knock-on effect globally, with competing U.S. and Chinese spheres of AI influence set to emerge."

Chip Stocks Tumble After China's DeepSeek AI Models Raise Doubts Over U.S. Tech Dominance

Global chip stocks slumped Monday after Chinese artificial-intelligence company DeepSeek said it developed AI models that nearly matched American rivals despite using inferior chips, raising fears it could disrupt the global dominance of U.S. tech. DeepSeek said its R1 and V3 models--both in the top 10 on ranking platform Chatbot Arena--performed better than or close to leading Western models. The company said training one of its latest models cost $5.6 million, compared with the $100 million to $1 billion range cited last year by the CEO of U.S. rival Anthropic. DeepSeek said in a technical report that it used a cluster of more than 2,000 Nvidia chips to train its V3 model, compared with tens of thousands of chips that are normally used for training models of similar size. The E-mini Nasdaq 100 futures contract trades 3% lower early Monday, signaling the tech-heavy index is expected to extend losses at the open. Nvidia shares slumped 7% premarket, with Micron Technology down more than 6% and Advanced Micro Devices shedding nearly 4%. Swissquote Bank's Ipek Ozkardeskaya said futures were hammered by news that DeepSeek could run its latest AI models on less advanced chips, raising fears it could disrupt the global dominance of U.S. tech. In Europe, shares of Dutch semiconductor-equipment maker ASML Holding and its smaller rival ASM International were both down more than 10% in Amsterdam. In Asia, shares of chip-making equipment supplier Tokyo Electron closed nearly 5% lower.

DeepSeek's 'Sputnik moment' prompts investors to sell big AI players

This photo illustration shows the DeepSeek app on a mobile phone in Beijing, Jan. 27. AFP-Yonhap Investors hammered technology stocks on Monday, sending the likes of Nvidia and Oracle plummeting, as the emergence of a low-cost Chinese artificial intelligence model cast doubts on Western companies' dominance in this sector. Startup DeepSeek last week launched a free assistant it says uses less data at a fraction of the cost of incumbent players' models, possibly marking a turning point in the level of investment needed for AI. Futures on the Nasdaq 100 slid almost 4 percent, suggesting the index could see its biggest daily slide since September 2022 later on, if those losses are sustained. Those on the S&P 500 dropped 2 percent. Shares in AI chipmaker Nvidia fell 10 percent, rival Oracle dropped 8 percent and AI data analytics company Palantir lost 7 percent in pre-market trading. DeepSeek, which by Monday had overtaken U.S. rival ChatGPT in terms of downloads on the Apple Store, offers the prospect of a viable, cheaper AI alternative which has raised questions about the sustainability of the level of spending and investment on AI by Western companies, including Apple and Microsoft. From Tokyo to Amsterdam, shares in AI players tumbled. "We still don't know the details and nothing has been 100 percent confirmed in regard to the claims, but if there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number this is actually very positive for productivity and AI end users as cost is obviously much lower meaning lower cost of access," Jon Withaar, a senior portfolio manager at Pictet Asset Management, said. The hype around AI has powered a huge inflow of capital into the equity markets in the last 18 months in particular, as investors have bought into the technology, inflating company valuations and sending stock markets to record highs. Little is known about the small Hangzhou startup behind DeepSeek. Its researchers wrote in a paper last month that the DeepSeek-V3 model, launched on Jan. 10, used Nvidia's H800 chips for training, spending less than $6 million - the figure referenced by Pictet's Withaar. H800 chips are not top-of-the-line. Initially developed as a reduced-capability product to get around restrictions on sales to China, they were subsequently banned by U.S. sanctions. This photo illustration shows the DeepSeek app on a mobile phone in Beijing, Jan. 27. AFP-Yonhap 'Sputnik moment' Marc Andreessen, the Silicon Valley venture capitalist, said in a post on X on Sunday that DeepSeek's R1 model was AI's "Sputnik moment", referencing the former Soviet Union's launch of a satellite that marked the start of the space race in the late 1950s. "Deepseek R1 is one of the most amazing and impressive breakthroughs I've ever seen -- and as open source, a profound gift to the world," he said in a separate post. In Europe, ASML which counts Taiwan's TSMC , Intel and Samsung as its customers, dropped almost 11 percent, while in Japan, startup investor SoftBank Group slid more than 8 percent. Last week it announced a $19 billion commitment to fund Stargate, a datacenter joint venture with OpenAI. Big Tech has ramped up spending on developing AI capabilities and optimism over the possible returns has driven stock valuations sky-high. Nvidia alone has risen by over 200 percent in about 18 months and trades at 56 times the value of its earnings, compared with a 53 percent rise in the Nasdaq, which trades at a multiple of 16 to the value of its constituents' earnings, according to LSEG data. Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore said the market was questioning the capex spend of the major tech companies. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management said: "The idea that the most cutting-edge technologies in America, like Nvidia and ChatGPT, are the most superior globally, there's concern that this perspective might start to change." "I think it might be a bit premature," Ichikawa said. (Reuters)

DeepSeek's low-cost model rattles Australian AI shares

(Reuters) - Australian stocks that are exposed to the artificial intelligence wave fell sharply on Tuesday as investors feared the emergence of a low-cost AI model from Chinese startup DeepSeek would threaten the dominance of current market leaders. Shares of AI software firm Appen fell 3.3%, while AI chipmaker Brainchip lost 10.3% by 0029 GMT. The technology sub-index was down 1%. Last week, DeepSeek launched a free AI assistant that it says uses less data at a fraction of the cost of incumbent services. By Monday, the assistant had surpassed U.S. rival ChatGPT in downloads from Apple's app store. The new model's sudden rise sent global technology stocks crashing overnight, with leader Nvidia losing $592.7 billion in market capitalization, the biggest one-day loss for a Wall Street stock, according to data compiled by LSEG. In Australia, data centre landlords Goodman Group, NEXTDC and DigiCo Infrastructure REIT tumbled 6.4%, 6.2% and 11.1%, respectively, as DeepSeek's model sparked concerns of lowered spending on infrastructure. Australia's data-centre market saw outsized investment last year as the AI boom drove a frenzied demand, with giants such as Nvidia pouring billions to build capacity. "In our view, DeepSeek most likely drives further demand for data centers globally with advanced computational capabilities, high capacity storage, robust networking, energy efficient designs and infrastructure," analysts at Citi said in a note. Jessica Amir, a market strategist at trading platform Moomoo, said she expects Australians to reassess their exposure to AI and technology after the DeepSeek-induced selloff, and rotate to safe havens such as healthcare and staples. (Reporting by Aaditya Govind Rao in Bengaluru; Editing by Alan Barona)

Why Nvidia, Broadcom, Microsoft, and Other Artificial Intelligence (AI) Stocks Crashed Monday Morning | The Motley Fool

Unexpected results from an AI upstart have sent these stocks reeling. One of the biggest market drivers of technology stocks over the past couple of years has been rapid advancements in the field of artificial intelligence (AI). These next-generation algorithms took a giant leap forward from their predecessors, promising to streamline processes and improve productivity. Many big tech companies have been spending heavily to get a jump on the technology. But a Chinese start-up called DeepSeek may have just upended conventional thinking about how best to train AI models. As a result, a slew of AI stocks tumbled on Monday. AI-centric chipmaker Nvidia (NVDA -15.75%) crashed 17.3%, semiconductor specialist Broadcom (AVGO -16.87%) crumbled 16.4%, cloud and software giant Microsoft (MSFT -3.80%) slumped 3.8%, and cloud computing and search titan Alphabet (GOOGL -3.18%) (GOOG -3.01%) fell 2.8%, as of 11:43 a.m. ET. One-year-old Chinese start-up DeepSeek introduced its latest AI model, dubbed R1, and its abilities caught many in the tech world off guard. The performance of the system, which is similar to OpenAI's ChatGPT, quickly ascended the ranks to become one of the top 10 in the world. What made these results even more striking was that they were achieved with older-generation processors at a much lower cost, according to the company. DeepSeek achieved these remarkable results by taking a new approach to training its AI models. The process, known as reinforcement learning -- or reward-driven optimization -- appears to be more adept at refining its strategy for problem-solving or attempting different approaches to achieve the desired results. Thus far, one of the biggest challenges with AI is not knowing how the algorithms arrived at a particular conclusion, making them a "black box." DeepSeek's R1 model shows its work, thus eliminating the uncertainty. Venture capitalist and well-known tech aficionado Marc Andreessen fueled the fire this weekend when he posted on X (formerly Twitter) that "DeepSeek R1 is one of the most amazing and impressive breakthroughs I've ever seen -- and as open source, a profound gift to the world." To be clear, experts say that DeepSeek's R1 still trails the performance capability of models produced by OpenAI and Alphabet, but the fact that it was able to do so with a smaller number of inferior chips threatened to upend the existing paradigm. AI stocks and the broader tech sector plunged on the news, reeling from the potential implications for the industry: That said, veteran Wedbush tech analyst Dan Ives called today's sell-off a "golden buying opportunity," noting that many of the claims by the start-up have yet to be verified. He goes on to suggest that "no U.S. Global 2000 [company] is going to use a Chinese start-up DeepSeek to launch their AI infrastructure," saying it doesn't rise to the level of "competitive threat." Further fueling the decline of some of these stocks is their higher valuations, at least when measured using the most commonly employed metrics. Heading into today's trading, Broadcom, Nvidia, and Microsoft were selling for 200 times, 56 times, and 37 times earnings, respectively. Alphabet was the outlier, selling for a discount at 27 times earnings. It's important to note that while the price-to-earnings (P/E) ratio is among the most widely used valuation metric, it tends to fall short when assessing high-growth stocks. After today's decline, Nvidia, Microsoft, Broadcom, and Alphabet are selling for 41 times, 33 times, 33 times, and 22 times forward earnings -- so they're not nearly as expensive as they might appear at first glance. Finally, it's still early days in the development of generative AI. Today is a prime example of a knee-jerk reaction from some investors when a more measured approach is called for. Each of our quartet of stocks has an impressive track record going back decades, and while it may be tempting to follow the crowd and give in to the market panic, astute investors will know to wait for all the evidence to come in before leaping to what could be a costly conclusion.

Chinese AI app rattles Wall Street sending seismic shockwaves around stock world

Chinese artificial intelligence app, DeepSeek, has sent shockwaves around the financial world after its startling popularity wiped almost $1 trillion from the US stock market, however, users quickly discovered certain prompts challenging China were stonewalled. Nvidia, the world's most valuable company, dropped an astonishing 17 per cent on Monday after the opening bell, stripping $US600 billion ($955 billion) from the company's market capital. DeepSeek was released last week and was largely overshadowed by the inauguration of US President Donald Trump, who shortly after announced an investment worth up to $500 billion for AI infrastructure as part of a new partnership formed by OpenAI, Oracle and SoftBank. The Chinese start-up challenges OpenAI's ChatGPT and Nvidia, which produces semiconductors used in AI technology, due to its cheaper chips and lower data use, effectively throwing doubt into the widespread bet in financial markets the industry will drive demand from chipmakers to data centres. Lending to the seismic stock activity was DeepSeek's claim it developed its new AI model 'R1' for just $5.6 million, compared to the billions poured into the US equivalents. Silicon Valley venture capitalist Marc Andreessen said DeepSeek was "one of the most amazing and impressive breakthroughs" in AI, describing DeepSeek's R1 as AI's "Sputnik moment". AI models from ChatGPT to DeepSeek require advanced chips to power their training. The Biden administration has since 2021 widened the scope of bans designed to stop these chips from being exported to China . However, DeepSeek researchers wrote in a paper last month that the DeepSeek-V3 used Nvidia's H800 chips for training, costing less than $6 million. Due to DeepSeek's astonishing cheapness compared to the US tech titans, XTB research director Kathleen Brooks anticipated the economics of AI to be "turned on its head" by China. DeepSeek's AI Assistant on Monday overtook rival ChatGPT to become the top-rated free application available on Apple's App Store in the United States. "It's clearly not good for ChatGPT to have an aggressive competitor, but we don't buy the thesis that this is going to tank the demand for high-end GPUs," said Infrastructure Capital Advisors CEO Jay Hatfield, referring to the advanced semiconductors needed to run AI applications. Despite the astonishing popularity of DeepSeek, the latest AI model to hit the scene was met with scrutiny after users discovered certain prompts were stonewalled by the AI learning tool. Users prompted the DeepSeek with such a question as "what happened in 1989 at Tiananmen Square?" to which the AI learning tool responded with "sorry, that's beyond my current scope. Let's talk about something else." Prompts relating to or mentioning China's president Xi Jinping were also censored. Before market close, Nvidia's shares slumped 17.26 per cent, while a semiconductor index (SOX) slid 10.2 per cent, heading for its worst single-day drop since March 2020. Microsoft and Google-parent Alphabet fell 2.4 per cent and 3.6 per cent, respectively, while AI server makers Dell Technologies and Super Micro Computer skid 11.7 per cent and 14.1 per cent. Power companies, which are expected to see a surge in demand from energy-intensive data centres needed to develop AI technology, also came under pressure. Vistra and GE Vernova tumbled 28.9 per cent and 21.7 per cent respectively.

Nasdaq drops 3% as China's DeepSeek AI model hits tech shares

Nasdaq experienced its largest single-day percentage drop since December 18, mainly due to a selloff in U.S. chipmakers triggered by a low-cost Chinese AI model from DeepSeek. Nvidia's significant 17% drop erased $593 billion in market value. Key companies like Microsoft and Google-parent Alphabet also saw declines. The Federal Reserve's upcoming decision on interest rates is highly anticipated. 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. AI leader Nvidia sank 17%, and it erased about $593 billion in stock market value, the deepest ever one-day loss for a company on Wall Street, according to LSEG data. It was more than double the previous one-day record loss, set by Nvidia last September. An index of semiconductor stocks dropped 9.2% in its biggest single-day percentage fall since March 2020. Chinese startup DeepSeek has rolled out a free assistant it says uses cheaper chips and less data, raising questions about investor expectations that AI will drive demand along a supply chain from chipmakers to data centers. DeepSeek's AI Assistant by Monday had overtaken U.S. rival ChatGPT in downloads from Apple's App Store. Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said there are still many questions about the DeepSeek model and its impact. "Today is a drubbing for these (AI leader) stocks, but I don't necessarily think whatever's going to happen in the short while here - the next couple of days - is where they are ultimately valued," she said. Optimism over AI and gains in Nvidia and other big technology-related shares helped to drive the stock market's sharp gains in 2024. The Dow Jones Industrial Average rose 289.33 points, or 0.65%, to 44,713.58, the S&P 500 lost 88.96 points, or 1.46%, to 6,012.28 and the Nasdaq Composite lost 612.47 points, or 3.07%, to 19,341.83. The S&P 500 registered its biggest one-day percentage fall since Jan. 10. The Cboe Volatility Index, known as Wall Street's "fear gauge", rose. Among other big tech-related companies, Microsoft shares fell 2.1% and Google-parent Alphabet dropped 4.2%, while AI server maker Dell Technologies declined 8.7%. Data center operators also tanked, including Digital Realty , which fell 8.7%. Power companies, which are expected to see higher demand from energy-intensive data centers needed to develop AI technology, also fell. Vistra dropped 28.3%. Tech stocks are likely to stay in focus this week, with some big technology names, including Microsoft, due to post-quarterly results. Investors are keen to hear from the Federal Reserve, which is widely expected to hold its lending rate steady in its first interest-rate decision of the year due on Wednesday. Market watchers also were digesting news that the U.S. and Colombia pulled back from the brink of a trade war on Sunday after the White House said the South American nation had agreed to accept military aircraft carrying deported migrants. Volume on U.S. exchanges was 17.39 billion shares, compared with the 14.90 billion average for the full session over the last 20 trading days. Advancing issues outnumbered decliners by a 1.1-to-1 ratio on the NYSE. There were 109 new highs and 56 new lows on the NYSE. On the Nasdaq, 1,839 stocks rose and 2,641 fell as declining issues outnumbered advancers by a 1.44-to-1 ratio.

Tech shares in Asia and Europe fall as China AI move spooks investors

Progress by startup DeepSeek raises doubts about sustainability of western artificial intelligence boom Tech shares in Asia and Europe have taken a hit as the emergence of a Chinese chatbot competitor to OpenAI's ChatGPT, DeepSeek, raised doubts about the sustainability of the US artificial intelligence boom. Shares in companies listed in Asia and Europe fell on Monday morning and the tech-heavy Nasdaq index in New York was poised to open lower after investors digested the implications of AI models developed by startup DeepSeek. The DeepSeek AI assistant topped the Apple app store in the US and UK over the weekend, above OpenAI's ChatGPT. DeepSeek claims to have used fewer chips than its rivals to develop its models, making them cheaper to produce and raising questions marks over a multibillion-dollar AI spending spree by US companies that has boosted markets in recent years. Marc Andreessen, a leading US venture capitalist, compared the launch of DeepSeek's R1 model to a pivotal moment in the US-USSR space race, posting on X last week that it was AI's "Sputnik moment." According to DeepSeek, its R1 model outperforms OpenAI's o1 mini model across "various benchmarks", while research by Artificial Analysis puts it above models developed by Google, Meta and Anthropic in terms of overall quality. The pan-European Stoxx 600 lost 0.75% in early trading, and technology stocks were down by 4.5%. The Dutch chipmaker ASML slid by 8.2%, while Germany's Siemens Energy, which provides hardware for AI infrastructure, lost 4.1% and France's digital automation company Schneider Electric fell by 6.8%. Frankfurt-listed shares in Nvidia, the US chipmaker which has been at the forefront of developments in AI, slipped about 7%, while those of Tesla, Amazon and Meta fell more than 2% in early European trading. It followed losses in Asia, where the Japanese chip companies Disco and Advantest - a supplier to Nvidia - suffered declines of 1.8% and 8.6% respectively. In the US, Nasdaq 100 futures were down 2.6% and S&P 500 futures slipped 1.4%. "It will almost certainly put the cat among the pigeons as investors scramble to assess the potential damage it could have on a burgeoning industry which has powered much of the gain seen in the main indices over the last couple of years," said Richard Hunter, the head of markets at the investment platform Interactive Investor. He added: "The larger question has suddenly become whether the hundreds of billions of dollar investment in AI needs re-evaluation."

DeepSeek Jitters Shatter US Tech Stocks, Wipe Out $1.2 Trillion On Wall Street: Analyst Eyes Four Chinese Giants Set To Benefit - Arista Networks (NYSE:ANET), ARM Holdings (NASDAQ:ARM)

Goldman Sachs warns Chinese AI firms like Alibaba Group and Tencent could gain global dominance with cost-efficient models. U.S. tech stocks are crumbling like dry sand in premarket trading Monday as Chinese open-source artificial intelligence platform DeepSeek R1 sparks investor fears over AI competition and capital allocation into high-cost American firms. Futures on the Nasdaq 100 plunged 4% as of 8:00 a.m. ET, setting the stage for their worst session since September 2022. Semiconductor stocks, the backbone of AI development, are bearing the brunt of the selloff, with AI darling Nvidia Corp. NVDA plunging 12%, potentially eyeing its worst day since March 18, 2020. The iShares Semiconductor ETF SOXX is down 4.5%, with heavy losses also hitting Marvell Technology Inc. MRVL, down 13%, Broadcom Inc. AVGO, down 11%, and Arm Holdings plc ARM, down 9.5%. AI infrastructure and data center stocks are also seeing steep declines, with GE Vernova Inc. GEV plummeting 14%, Vistra Corp. VST and Constellation Energy Corp. CEG both sliding 11.5%, and Arista Networks Inc. ANET falling 10%. The S&P 500 is not immune to the fallout, with futures on the index falling 2.2%, while the Dow Jones Industrial Average is inching 0.8% lower due to its smaller exposure to tech. With AI stocks leading market gains over the past year, today's rout threatens to wipe out $1.2 trillion in market capitalization. DeepSeek: A Game-Changer In AI? DeepSeek R1, an open-source AI model, is reportedly rivaling top U.S. AI models at a fraction of the cost, leveraging lower-power NVIDIA chips to bypass U.S. export restrictions. "DeepSeek has produced a large language model that rivals many of the leading U.S. offerings. And they've done it at a fraction of the cost, using less powerful chips," said David Morrison, senior market analyst at Trade Nation. Investors are now questioning whether AI software firms can sustain their pricing models. Bloomberg Intelligence analyst Mandeep Singh highlighted that OpenAI charges $200 per month for its premium subscription, raising doubts about its pricing power if open-source alternatives offer similar or superior performance at a significantly lower cost. "How do you justify that cost if an open-source platform does it better?" Singh said. With billions in capital expenditures planned for 2025-2027, any shift in corporate spending could redefine the trajectory of AI investing. "I don't think they are walking back on 2025 capex," Singh added, dismissing the idea that companies would scale back investments immediately. The AI frenzy that has propelled the "Magnificent Seven" stocks to record highs is now facing its biggest test. With major U.S. tech earnings due this week, investors are demanding answers. "If the Mag-7's Q4 earnings disappoint, these seven stocks could drag the S&P 500 down significantly since they account for a whopping 30.5% of the market cap of the index," warned Ed Yardeni, President of Yardeni Research. Chinese Stocks To Watch In a note on Sunday, Goldman Sachs analyst Ronald Keung highlighted that DeepSeek's breakthrough could lower barriers to entry in AI, paving the way for increased global competition. "We believe increasingly agile Chinese models and significant improvement in computing cost efficiencies could drive further room for wider adoption, exploration, and proliferation of AI applications," Keung said. He also indicated the potential for Chinese AI firms to expand their influence, pointing to companies like Alibaba Group Holding Ltd. BABA, China's largest cloud provider, and Tencent Holdings TCEHY, which has deep AI integration within its WeChat ecosystem. According to Keung, also data centers GDS Holdings Ltd. GDS and Vnet Group Inc. VNET are expected to "benefit from ongoing public cloud and AI computing demand growth from multi-year higher AI adoption." Now Read: Satya Nadella Said 'We Should Take Development Out Of China Very, Very Seriously.' Now, DeepSeek's R1 Has Emerged As A ChatGPT Killer, Outperforming OpenAI With 50x Lower Costs: Here's More Image: Shutterstock ANETArista Networks Inc$114.48-11.4%WatchlistOverviewARMARM Holdings PLC$149.39-8.08%AVGOBroadcom Inc$218.90-10.5%BABAAlibaba Group Holding Ltd$91.312.43%CEGConstellation Energy Corp$294.00-15.4%GDSGDS Holdings Ltd$22.880.39%GEVGE Vernova Inc$355.00-15.6%MRVLMarvell Technology Inc$109.27-11.9%NVDANVIDIA Corp$126.90-11.0%SOXXiShares Semiconductor ETF$220.46-4.41%TCEHYTencent Holdings Ltd$50.700.70%VNETVNET Group Inc$6.68-4.43%VSTVistra Corp$159.50-16.5%Market News and Data brought to you by Benzinga APIs

NVIDIA shares bleed $384 billion in value in a few hours after China's DeepSeek shocks AI world

Chinese AI company DeepSeek is making some serious waves in the world of AI, with its R1 model being trained for 90-95% less money... making the industry re-consider all those AI GPU purchases... and seeing NVIDIA stock dropping 11% in pre-market trading, bleeding out $384 billion. Ouch. It's not just NVIDIA but other major tech stocks are down, with AMD also down by 5.3% in pre-market trading. Microsoft is also down by 6% and Meta is down by 4.6%... with hundreds of billions of dollars spent, and hundreds of billions of dollars more to spend on AI GPUs... these companies must be worried about the impact DeepSeek is going to have on the market. DeepSeek has said its R1 model costs just $5.6 million to train, and when compared to other AI models like ChatGPT o1 from OpenAI which cost hundreds of millions of dollars to train... on hundreds of billions of dollars of the most advanced AI chips on the planet... which are mostly made by NVIDIA. If all of this is true, and DeepSeek can provide virtually similar AI assistance goodness that the headline-grabbing, drama-filled, somewhat shady operations of OpenAI and its ChatGPT assistant, well... China has a huge deal on its hands. This is just the beginning of the stock slide if that's true, because companies will begin asking if they REALLY need all of those mega-expensive AI servers, if DeepSeek can do it at 90-95% less cost. DeepSeek's new R1 model has 671 billion parameters is rather large, with smaller "distilled" versions of R1 models ranging from 1.5 billion parameters to 70 billion parameters. DeepSeek's smallest R1 model can run on a laptop, but for the full-force R1 model it requires much more hardware... but, it's available through DeepSeek's API at prices that are a game-changing 90-95% cheaper than OpenAI's o1 model.

DeepSeek damage to US markets has leveled, but not reversed

Nvidia says its chips are still needed, OpenAI says it'll keep buying them en masse, but shares are still down US tech shares, rattled yesterday by the release of a supposedly more efficient AI model by Chinese outfit DeepSeek, appear to have staunched the bleeding, but not recovered. After losing enough market cap on January 29 to set a new record, Nvidia has pick up by a few percent, though not enough to erase the losses. The same goes for firms like Oracle, Marvell and Supermicro, all of which lost considerable cash and all of which recovered - slightly - overnight. Shares in the businesses dipped again when trading began in the US this morning, but were hovering near their low-points when markets closed yesterday. Similar chaos hit tech stocks in Japan for a second day as concern over whether all those expensive chips are needed to develop cutting-edge AI: After all, if China can do it on the cheap in the face of sanctions keeping it from getting its hands on the latest and greatest AI chips, why is all that high-end Nvidia hardware necessary? Nvidia has explained the advancement as an "excellent AI advancement" in the realm of scaling resources to allow a model to think harder, known as test-time scaling that leveraged "widely available models and compute that is fully export control compliant," the company told The Register in a statement. But don't go thinking Nvidia is admitting defeat: It still thinks you're going to need a lot of its chips. "Inference requires significant numbers of NVIDIA GPUs and high-performance networking," the company said yesterday. "We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling." OpenAI chief Sam Altman also celebrated DeepSeek's new R1 model as "impressive ... particularly around what they're able to deliver for the price." Altman said it is "legit invigorating to have a new competitor," but assured backers his company "will obviously deliver much better models" as it works to advance its AGI mission. "[We] believe more compute is more important now than ever before to succeed at our mission," Altman said. In other words, American AI firms will still be buying Jensen's chips as fast as he can assemble them. That confidence isn't lost on US retail investors, who bought a record amount of Nvidia shares following the company's losses yesterday. US President Trump also weighed in on the chip stock battering, saying yesterday that DeepSeek "should be a wake-up call" for US tech companies. David Sacks, Trump's AI and crypto czar, took the opportunity to say DeepSeek proved his boss right in scrapping Biden's AI safety executive order, which he said in a post on X "hamstrung American AI companies without asking whether China would do the same." "DeepSeek R1 shows that the AI race will be very competitive and that President Trump was right to rescind the Biden EO," Sacks said. "I'm confident in the US but we can't be complacent." ®

DeepSeek latest: Tech stocks plunge as China 'delivers AI wake-up call'

Tech stocks have plunged around the world after a China AI start-up unveiled a new chatbot which threatens to match its major global competitors at a lower cost. DeepSeek's new artificial intelligence chatbot has soared to the top of the Apple Store's download charts as it stunned industry insiders with its ability to match its US competitors. The Nasdaq in New York plunged more than 3pc in premarket trading as DeepSeek said it had spent only $5.6m (£4.5m) developing its model - peanuts when compared with the billions US tech giants have poured into AI. William Beavington of Jefferies said: "What's particularly remarkable to us really is the cost effectiveness and the efficiency they have driven from the chips being used." DeepSeek was developed by a start-up based in the eastern Chinese city of Hangzhou, known for its high density of tech firms. Available as an app or on desktop, it can do many of the things that its Western competitors can do - write song lyrics, help work on a personal development plan, or even write a recipe for dinner based on what's in the fridge. Shares in major tech firms in the US and Japan have tumbled, with chip making giant Nvidia - the world's dominant supplier of AI hardware and software - closing down more than 3pc on Wall Street on Friday and lower by another 8pc in premarket. Japanese tech conglomerate SoftBank, a key investor in US President Donald Trump's announcement of a new $500bn (£401bn) venture to build infrastructure for artificial intelligence in the United States, lost more than 8pm overnight. Venture capitalist Marc Andreessen, a close advisor to Trump, described it as "AI's Sputnik moment" - a reference to the Soviet satellite launch that sparked the Cold War space race. Scale AI's Wang wrote on X that DeepSeek "is a wake up call for America".

Will DeepSeek Burst VC's AI Bubble?

For many investors in artificial intelligence, the week started with a jolt as a Chinese AI app sent tech stocks plummeting and likely left many privately held startups shaking. DeepSeek, birthed by a China-based hedge fund, claims to have created AI models that rival even those of OpenAI -- but at much lower cost and using less energy. The news that the U.S. may be falling behind in the AI arms race sent shares of many publicly traded tech companies nosediving on Monday. AI giant Nvidia's shares dropped more than 15% at certain points of trading, falling back to a price point it has not seen since last fall. The tech- heavy Nasdaq Composite also plunged about 3% in early afternoon trading as investors started to sell off tech stocks on concerns China has usurped the AI crown from the U.S. Public-market investors surely are not the only ones watching the ramifications of the DeepSeek news closely. Nearly a third of all global venture funding last year went to companies in AI-related fields as funding to those startups reached over $100 billion, per Crunchbase data. The fourth quarter alone saw more than $42 billion invested into AI-related startups, per Crunchbase. That was nearly twice as much money as was invested in Q3 2024 -- which was a record at the time. It also was about 3.5x the amount invested in Q4 2023. That means there likely were many VC firms watching the DeepSeek news blitz this weekend very closely, wondering just what effect the Chinese upstart will have on their portfolios. Just last week we examined several firms with the most AI-related investments last year. Names including Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital dominated the list. Those firms -- the ones with the most money on the biggest bets -- are likely more curious than ever if the U.S. is indeed king of AI. The foundational model startups that have raised billions of dollars at sky-high valuations are also likely watching the DeepSeek news closely and wondering what the mania around the China-based startup will mean for their next fundraise or secondary offering. The project is anticipated to help build out $100 billion to $500 billion in AI datacenters and infrastructure, and is a key piece of the new administration's plan to fuel the U.S. economy's growth through the booming AI industry. DeepSeek's emergence could scuttle some of those plans and expectations. However, it is much too early to know anything for sure, including whether the Chinese company did indeed build cheaper and better AI models. There also assuredly will be concerns about personal data with DeepSeek being a China-based firm. Such concerns are already at the core of the U.S.' current issues with TikTok, the video sharing platform that has turned into a political hot potato due to its ties to China. Much still has to be learned and sorted out, but it does seem possible we are heading into a much different AI world than many investors envisioned.

Investors think DeepSeek is a serious threat to high-value U.S. tech stocks

This story incorporates reporting from The Daily Telegraph, Seeking Alpha and Bloomberg on MSN.com. The emergence of China's DeepSeek has caused notable disruption in the U.S. stock markets. DeepSeek, a start-up based in Hangzhou, recently unveiled a new artificial intelligence chatbot. This development sent shockwaves through technology sectors, leading to a steep drop in U.S. stock indices. The tech-heavy Nasdaq Composite index, in particular, experienced a significant decline, plummeting by 3.6% at the opening bell -- marking its steepest fall in five months. DeepSeek's new product threatens to meet the capabilities of top global competitors in artificial intelligence. Despite the high advancement, the company has revealed that it developed its model at a modest cost of $5.6 million. This factor has raised concerns among investors regarding the competitive positioning of existing U.S. tech giants. Such companies have historically dominated the market through heavy investments in research and development. The response from the stock market underscores the investor anxiety surrounding potential shifts in price-to-earnings (P/E) ratios for U.S. tech firms. These companies have capitalized on premium market valuations driven by continuous innovation and expansion. However, a viable low-cost alternative from an agile competitor like DeepSeek could pressure these companies to reassess their pricing strategies and overall market approaches. DeepSeek's base in Hangzhou, renowned for its concentration of technology firms, provides it with a strategic advantage in the fast-growing artificial intelligence industry. This could further amplify concerns for U.S. tech firms, which are also contending with various regulatory and economic challenges closer to home. Furthermore, international competition -- particularly from Chinese tech firms -- adds to the complexity of maintaining competitive edges. The shockwaves initiated by DeepSeek's announcement reflect a broader trend of increased competitiveness in the global AI market. As barriers to entry decrease, the landscape becomes increasingly multi-polar. Investors will likely continue to monitor developments in DeepSeek and its trajectory in the marketplace, as the ramifications could extend beyond immediate market valuation shifts, impacting strategic decisions within the technology sector in the long term. While Seeking Alpha and other financial analysts refrain from providing specific investment advice, they note the implications for U.S. tech firms' P/E ratios. As the industry adapts to these challenges, it remains crucial for investors to stay informed about evolving market dynamics and recalibrate their strategies accordingly.

Stock Market Today: Nasdaq drops as AI fears rock tech stocks, DeepSeek challenges Nvidia's dominance, Magnificent 7 stumble

The stock market saw a sharp drop, with the Nasdaq leading the decline, falling nearly 3%, as fears about AI's future shook investor confidence. The rise of Chinese AI startup DeepSeek, which claims to offer cheaper and equally effective AI solutions, has challenged U.S. dominance in the tech space, particularly hitting Nvidia hard.The stock market took a hit as fears surrounding artificial intelligence (AI) dominated Wall Street. The Nasdaq dropped over 3%, fueled by concerns over China's DeepSeek, an AI startup challenging the dominance of US tech giants like OpenAI and Nvidia. DeepSeek's more efficient model, using fewer chips, has shaken investor confidence in the AI-driven growth that's powered major stocks. Nvidia saw its stock plunge by 11%, while other tech leaders, including Microsoft, Alphabet, and the "Magnificent 7" group, also took losses. This shift in AI competition raises critical questions for future growth in the sector. On Monday, the Nasdaq Composite led the way with a sharp drop of nearly 3%, and the S&P 500 followed closely behind, falling 1.7%. The Dow Jones Industrial Average also declined by 0.2%. DeepSeek, a Chinese AI startup, has garnered attention after claims that its AI assistant performs as well as top models but at a fraction of the cost. Unlike its American counterparts, DeepSeek reportedly uses cheaper chips and less data to achieve similar results. This development is raising serious questions about the future of U.S. dominance in the AI field. Investors, particularly in the tech sector, are now reassessing their positions, fearing that this could disrupt the AI-driven growth that has fueled major stock gains. Also Read : Donald Trump's threat looms: Iran, facing an existential crisis, asks proxies not to provoke Americans; Ayatollah Khamenei, Iran's supreme leader, appears in a bulletproof jacket One of the biggest casualties of this new AI competition is Nvidia, the chipmaker that has been a leader in AI hardware. Nvidia's stock plummeted by nearly 11% in response to DeepSeek's rise. Other tech companies tied to the AI boom also felt the impact. Semiconductor companies like ASML, Broadcom, and Micron Technology saw sharp declines, with ASML losing almost 8% of its stock value. The drop in these companies' stocks is reflective of the growing uncertainty surrounding the future of AI investments. The arrival of DeepSeek on the AI scene has caused investors to rethink their strategies. Many are now questioning whether the investments that have fueled stock price growth in AI companies, like Nvidia, are sustainable in the long term. As the news of DeepSeek's success spreads, tech companies like Microsoft, Alphabet (Google's parent company), Meta, and Amazon also saw losses in their stock prices. As tech stocks faltered, investors turned to safer assets. The 10-year Treasury yield dropped to 4.50%, its lowest level in over a month, signaling a shift toward more secure investments. The Japanese yen and Swiss franc also saw gains, further indicating that investors are seeking safety from the market's volatility. Also Read : A Chinese AI model built on a shoestring budget humiliates Silicon Valley giants and presents a major challenge to Donald Trump In addition to AI fears, concerns over potential trade wars are adding another layer of uncertainty to the market. Former President Donald Trump's threats of new tariffs have revived worries about the economic impact of trade disputes, particularly with China and other global partners. These trade tensions, combined with the rise of DeepSeek, are leaving investors feeling uneasy about the future direction of the global economy. How has DeepSeek affected Nvidia and other tech stocks? DeepSeek's rise has shaken investor confidence, leading to a sharp decline in Nvidia's stock and other major tech companies. The Chinese AI startup claims to offer cheaper, efficient AI solutions, challenging Nvidia's dominance and causing a market selloff. What is causing the stock market drop today? The stock market dropped due to growing concerns over DeepSeek's potential impact on AI and its competition with U.S. tech giants like Nvidia. Additionally, fears of rising tariffs under President Trump added to the market's uncertainty

DeepSeek Vs. U.S. Tech Giants: The Battle For AI Supremacy And Its Market Impact

Despite the market reaction, it's too early to determine if DeepSeek will be the new AI leader. By Zain Vawda Global markets have started a busy week with a lot of volatility as the little-known Chinese artificial intelligence model called 'DeepSeek' sparked a selloff in AI-related shares, with megacap stocks including Nvidia (NVDA Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.

DeepSeek panic triggers tech stock sell-off as Chinese AI tops App Store

On Monday morning, Nvidia stock dove 11 percent amid worries over the rise of Chinese AI company DeepSeek, whose R1 reasoning model stunned industry observers last week by challenging American AI supremacy with a low-cost, freely available AI model, and whose AI assistant app jumped to the top of the iPhone App Store's "Free Apps" category over the weekend, overtaking ChatGPT. The drama started around January 20 when Chinese AI startup DeepSeek announced R1, a new simulated reasoning (SR) model that it claimed could match OpenAI's o1 in reasoning benchmarks. Like o1, R1 is trained to work through a simulated chain of thought process before providing an answer, which can potentially improve the accuracy or usefulness of the AI models' outputs for some types of questions posed by the user. That first part wasn't too surprising since other AI companies like Google are hot on the heels of OpenAI with their own simulated reasoning models. In addition, OpenAI itself has announced an upcoming SR model (dubbed "o3") that can surpass o1 in performance. There are three elements of DeepSeek R1 that really shocked experts. First, the Chinese startup appears to have trained the model for only $6 million as a so-called "side project" while using less powerful Nvidia H800 AI-acceleration chips due to US export restrictions on cutting-edge GPUs. Secondly, it appeared just four months after OpenAI announced o1 in September 2024. Finally, and perhaps most importantly, DeepSeek released the model weights for free with an open MIT license, meaning anyone can download it, run it, and fine-tune (modify) it.

Japan chip stocks fall as DeepSeek's challenge to U.S. AI dominance raises worries for Asian tech firms

Employees move semiconductor testers on the assembly line of the Advantest Corp. plant in Ora, Japan on Aug. 10, 2012. Japan's chip-related stocks fell Monday as Chinese AI startup DeepSeek raises concerns about a potential challenge to America's global leadership in artificial intelligence that threatens Asian tech companies part of the U.S.-dependent AI value chain. "Japan's chip stocks are selling off sharply on the DeepSeek concerns and we are seeing a rotation out of growth names into value," Andrew Jackson, head of equity strategy at ORTUS Advisors told CNBC via email. Data center-related shares that were boosted by higher technology infrastructure spending will also be hit, he added. Shares of wire and cable firms Furukawa and Fujikura also fell 9.8% and 8.16%, respectively. DeepSeek launched a free, open-source large-language model in late December, claiming it was developed in just two months at a cost of under $6 million. Last week, the lab launched r1, a reasoning model that surpassed OpenAI's newest o1 in several third-party tests. The fresh developments triggered concerns about the large amounts of money big tech companies have been investing in AI models and data centers. DeepSeek also had to contend with the tough semiconductor restrictions the U.S. government placed on China, limiting access to advanced chips. "While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether U.S. tech giants' pricing power are being threatened and if their massive AI spending need re-evaluation," IG's market strategist Junrong Yeap said in a note. DeepSeek has become the most downloaded free app on Apple's iPhone. The fall in Japanese chip shares comes as Nasdaq futures dropped 1.62% during Asia trading hours. "Judging from the move in Nasdaq futures we may be in for a rough ride tonight in the U.S. also," Jackson added. "With a model this cheap, many new products and experiences can now emerge trying to win the hearts and minds of the global populace," said Chamath Palihapitiya, Canadian-American venture capitalist and CEO of Social Capital said on social media platform X, who sees volatility in the stock market as capital markets will seek to re-price the values of the "Magnificent 7" companies. "Nvidia is the most at risk for obvious reasons," he said.

China's DeepSeek AI Rattles Tech Stocks, Analyst Ives Says Market Plunge 'Golden Buying Opportunity' - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

DeepSeek's model is impressive, but Ives says it can't challenge Nvidia and the broader AI ecosystem. Tech stocks are under siege as DeepSeek, a little-known Chinese AI startup, shakes up the market with its latest large language model (LLM). But Wedbush analyst Daniel Ives isn't buying the panic, calling this sell-off "another golden buying opportunity" rather than a real threat to the AI revolution. DeepSeek's Surprise Move Sends Shockwaves DeepSeek's LLM, which launched last week, surged to the top of Apple Inc's AAPL App Store, rivalling OpenAI's ChatGPT and Meta Platforms Inc's META Llama 3.1. According to DeepSeek, was built in just two months for under $6 million, using restricted Nvidia Corp NVDA chips. That's enough to make Wall Street nervous, with heavy pressure on the Nasdaq and AI darlings like Nvidia feeling the heat. But Ives remains unfazed, pointing out that "No US Global 2000 is going to use a Chinese start-up DeepSeek to launch their AI infrastructure and use cases." Read Also: Nvidia Stock Slides Overnight On Robinhood As China's DeepSeek Sparks Doubts Over GPU Spending Frenzy -- Chamath Palihapitiya Highlights Report Indicating AI Holy Grail Cracked AI Revolution Intact - And Maybe Even Stronger While DeepSeek's reported achievement is impressive, Ives sees it as a speed bump, not a roadblock. "The focus of AI right now is the enterprise use cases and broader infrastructure propelling this $2 trillion of Cap-Ex over the next 3 years," he noted. The real AI arms race is in AGI, robotics, and autonomous tech -- territory where DeepSeek simply can't compete. Ives said this is just another moment for nervous traders to sell and for long-term investors to load up on Nvidia, Microsoft Corp MSFT, Alphabet Inc GOOGL GOOG, and the rest of the AI elite. "The bears have missed the historical rally in tech stocks the last two years and will miss the next two years constantly waiting for the black swan event to end the AI Revolution trade," Ives said. Read Next: Super Micro Stock Nosedives As DeepSeek AI Threat Rattles Investors Image created using artificial intelligence via Midjourney. AAPLApple Inc$225.331.14%Overview Rating:Good75%Technicals Analysis1000100Financials Analysis600100WatchlistOverviewGOOGAlphabet Inc$196.77-2.54%GOOGLAlphabet Inc$194.97-2.62%METAMeta Platforms Inc$644.70-0.43%MSFTMicrosoft Corp$429.15-3.36%NVDANVIDIA Corp$125.08-12.3%Market News and Data brought to you by Benzinga APIs

DeepSeek AI impact hits Europe, sends ASML stock tumbling

Stunning AI advances from Chinese startup DeepSeek have sent tech stocks tumbling across the US and Europe. DeepSeek released a free chatbot and new open-source AI models last week. Within days, the chatbot had overtaken ChatGPT to reach the top spot on the Apple App Store's free app rankings. The new R1 models sent further shockwaves through the AI world. R1 promised performance to rival OpenAI top's reasoning model -- at just a fraction of the cost. Marc Andreessen, one of the world's most powerful VCs, called the release "AI's Sputnik moment." The markets were also astounded. Shaken by the threat of a powerful, low-cost AI challenger from China, shares in US tech titans plummeted on Monday. Chip designer Nvidia set an alarming example. The chip designer suffered the largest rout in stock market history. European semiconductor firms were also hit hard. Shares in Dutch chip leader ASML -- the continent's most valuable public tech company -- slumped by as much as 12%. Semiconductor firms Besi and Asm International also endured double-digit drops. Yet chip companies were not the only European businesses to feel a painful impacts. The continent's power equipment makers were also clobbered. Stocks plummeted particularly sharply at Germany's Siemens Energy and France's Schneider Electric. Amid the market torment, DeepSeek has also sparked excitement. By offering powerful yet affordable open-source models, the startup could accelerate the spread of AI's benefits across the world. For the sector's established leaders, however, the landscape has been shaken.

Nvidia shares fall by 12% as China's DeepSeek triggers tech stock selloff

Tech-heavy NASDAQ futures, European tech shares, and most Asian markets (excluding China) saw sharp declines on Monday. Nvidia shares fell over 12%, along with other US tech stocks like ASML Holding NV, as Chinese AI startup DeepSeek unveiled chatbot performance comparable to Western rivals at a fraction of the cost.Nvidia Corp shares fell by more than 12% early on Monday, alongside several other US technology stocks, including ASML Holding NV. This comes as Chinese artificial intelligence (AI) startup DeepSeek aims to deliver performance comparable to Western chatbots, but at a fraction of the cost. At 7:00 am ET (5:30 PM in India), Nvidia's shares were priced at $125.50 on NASDAQ in pre-market trading, marking a 12% drop -- or $17.12 -- compared to the previous price. According to Bloomberg, ASML's shares also fell by around 11% to €626.20 each in Amsterdam trading, representing the biggest intraday drop since October 15 last year. Additionally, the Nasdaq 100 futures index has slumped. The NASDAQ composite index is currently down by 0.50%, or 99.38 points, at 19,954.30. Also Read : Donald Trump inauguration: What is the exact time the transition of power is official? Here are all details The US has already imposed bans on the export of advanced semiconductor technologies to China in an effort to slow its progress in AI. It is also restricting sales of advanced AI chips made by Nvidia to other countries, including key allies. However, DeepSeek's recent advancements suggest the company has found ways to circumvent these export bans, focusing on greater efficiency despite limited resources. Founded by quant fund chief Liang Wenfeng, DeepSeek's latest AI model is being touted as a serious competitor to OpenAI and Meta Platforms Inc. Launched earlier this month, the model has quickly risen to the top of Apple Inc.'s App Store rankings. In a note to clients, Jefferies analysts expressed concerns that DeepSeek could become a disruptor to the current AI business model, which heavily depends on high-end chips and extensive computing power. Both Nvidia and ASML have significantly benefited from the surge in AI-related spending. While Nvidia designs semiconductors used in AI, ASML manufactures the equipment required to produce high-end chips. On Friday, Meta announced plans to increase capital expenditures on artificial intelligence projects by up to 50% in 2025, reaching as much as $65 billion. Also Read : How Does Red Meat Consumption Contribute to Increased Dementia Risk? Study Reveals Surprising Findings This follows the announcement of a $100 billion joint venture -- named Stargate -- between OpenAI, SoftBank Group Corp, and Oracle Corp to build data centres and AI infrastructure projects in the US. 1. What is DeepSeek? The Chinese AI company, founded by Liang Wenfeng in 2023, has come up as a major challenger to other AI counterparts in the US, demonstrating breakthrough models at a fraction of the cost. 2. Why Nvidia shares are falling? Nvidia shares have fallen by over 10% as low-cost AI model from China's DeepSeek threatens to upend the profitability of several tech firms.

DeepSeek Sparks AI Carnage As Magnificent Seven, Broadcom Lose Nearly $900 Billion In Value: Why This Expert Is Still 'Bullish' On US Tech - Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN)

Analyst CJ Muse argues DeepSeek's AI breakthrough is actually bullish, predicting no slowdown in CapEx from major U.S. firms. A seismic shift is rattling Wall Street on Monday as China's DeepSeek R1 forces investors to rethink artificial intelligence dominance, sending U.S. tech stocks into a free fall. The Magnificent Seven and Broadcom Inc. AVGO have seen nearly $900 billion in market value erased within the first 30 minutes of trading in New York, as concerns grow over lower-cost Chinese AI models threatening America's top tech giants. Tech Bloodbath: Nvidia Leads Selloff The Roundhill Magnificent Seven ETF MAGS dropped 3.9%, reflecting deep losses across the AI-driven mega-cap space. Among the worst hit, Nvidia Corp. NVDA collapsed over 10%, erasing $475.81 billion. Microsoft Corp. MSFT followed with a 3.4% drop, wiping out $130.13 billion, while Broadcom slumped 11.8%, losing $116 billion in value. DeepSeek Sparks AI Valuation Fears The selloff was triggered by concerns that China's DeepSeek R1, an open-source AI model reportedly rivaling top U.S. models at a fraction of the cost, could erode pricing power and future growth prospects for U.S. AI firms. "The Stargate project was launched in part to assert the United States' global AI dominance and prevent China from taking the lead. If China already has the lead and is able to develop comparable AI products with cheaper, less dynamic chips and other inputs, it could result in a radical change in market perceptions," analyst Michael Gayed said. Goldman Sachs analyst Ronald Keung highlighted that cost-efficient Chinese AI firms could rapidly expand their global influence, challenging the massive capital expenditures made by U.S. tech giants. Yet, not all analysts see this as a long-term negative. CJ Muse, a semiconductor analyst at Cantor Fitzgerald, highlighted that DeepSeek's emergence could actually be bullish for Nvidia and the broader AI industry. "DeepSeek R1 is actually very bullish for Nvidia," Muse said on Bloomberg TV. "Their announcement means we are closer to AGI (artificial generative intelligence). That's bullish for the ubiquity of AI." Despite the stock plunge, Muse indicates that AI leaders will not cut capital expenditures anytime soon. "They are not going to slow down spending. They want to win," he said. Ahead of this week's key tech earnings, Muse doesn't expect any material change in CapEx announcements from Meta, Microsoft, or Nvidia. "The market has to digest the news and realize this is not a negative event," the analyst said. "China understands how important AI is for their economy," Muse stated, indicating that the tech battle vis-à-vis the U.S. is going to be fierce. "I wouldn't never bet against the engineer we have in the U.S." he ended. Major Tech Earnings Reports Loom As AI Investors Seek Clarity Four Magnificent Seven companies are reporting earnings this week, with investors closely watching whether AI spending remains robust despite growing competition. Below are Street's earnings-per-share and revenue estimates according to Benzinga Pro platform: Read Now: Bitcoin Flash-Crashes To $98,000 On China AI Fears, Trump Disappointment Image: Midjourney AAPLApple Inc$228.002.34%Overview Rating:Good75%Technicals Analysis1000100Financials Analysis600100WatchlistOverviewAMZNAmazon.com Inc$232.74-0.90%AVGOBroadcom Inc$212.05-13.3%GOOGAlphabet Inc$197.85-2.01%MAGSRoundhill Magnificent Seven ETF$55.00-2.34%METAMeta Platforms Inc$659.461.85%MSFTMicrosoft Corp$430.12-3.14%NVDANVIDIA Corp$123.56-13.4%TSLATesla Inc$404.83-0.43%Market News and Data brought to you by Benzinga APIs

AI-themed ETFs plunge in wake of DeepSeek news

(Reuters) - Prices of exchange-traded funds with outsize exposure to Nvidia plunged in the initial hours of trading on Monday in reaction to news that a Chinese startup has launched a powerful new artificial intelligence model. Technology market insiders like venture capitalist Marc Andreessen have labeled the emergence of year-old DeepSeek's model a "Sputnik moment" for U.S. AI companies, most of whose share prices slid on news that downloads of DeepSeek already have overtaken those of U.S. rival ChatGPT on Apple's online app store. While Nvidia's share price had tumbled nearly 17% by midday on Monday, prices of exchange-traded funds that offer leveraged exposure to the chipmaker plunged still further. The four ETFs that offer daily returns of double the gain in Nvidia were hit with the biggest decline, with the GraniteShares 2x Long NVDA Daily ETF nosediving 32.5%. Its leveraged inverse counterpart, which offers investors a gain of double any losses in Nvidia's stock, soared 31%. The asset management firms that offer these ETFs could not immediately be reached for comment. Other leveraged ETFs with large Nvidia exposure made equally dramatic moves. The ProShares Ultra Semiconductors ETF, which targets a return double that of the Dow Jones U.S. Semiconductors Index and has more than 40% of its assets in Nvidia, tumbled 24.43% by midday on Monday. "Volatility is what the gamblers in single-stock ETFs are looking for," said Bryan Armour, ETF analyst at Morningstar. "Those that have a bad experience now might shy away in future, but I'm sure they'll be replaced by others." The leveraged ETFs, which carry relatively high fees of close to 1% compared with about 0.4% for a typical actively managed ETF, are the domain of retail traders and speculators, Armour added. But other ETFs were caught up in the selling, including many owned by institutions and retail investors with a longer investment time horizon. For instance, the Vanguard Information Technology Index Fund traded down 4.7% by midday on Monday. Nvidia is the fund's second-largest holding, at nearly 15% of the portfolio. The VistaShares Artificial Intelligence Supercycle ETF lost about 7% by midday. It has a smaller exposure to Nvidia - only 3% - but owns a wide variety of other AI stocks. "Innovation and competition emerging in something as early-stage and dynamic as AI is not that surprising," said Adam Patti, co-founder and CEO of VistaShares. "The market will have to sort itself out over the months and years, as to what works and what will prevail." The rapid growth of AI enthusiasm sent assets in the VistaShares ETF - launched only seven weeks ago - to more than $3 billion by Friday, the firm said. The 2x GraniteShares Nvidia ETF - the largest of the leveraged funds - had $5.3 billion in assets as of Friday, according to data from VettaFi, accounting for about half of GraniteShares' total assets. The selloff follows a week in which investors "aggressively" unloaded holdings in leveraged technology ETFs, said research firm EPFR in its weekly analysis. The firm said these ETFs recorded the second-largest weekly outflow on record, of $1.8 billion, with investors selling $400 million in leveraged Nvidia exposure alone. Data for any outflows from these and other AI-themed ETFs on Monday is not available until Tuesday. (Reporting by Suzanne McGee in Providence, Rhode Island; Editing by Megan Davies and Matthew Lewis)

Big Tech faces heat as China's DeepSeek sows doubts on billion-dollar spending

(Reuters) - Chinese startup DeepSeek's cheaper AI is sharpening investor scrutiny of the billions U.S. tech giants are pouring to develop the technology and analysts say it will dominate this week's much-awaited results from industry bellwethers. DeepSeek has claimed it took just two months and cost under $6 million to build an AI model using Nvidia's less-advanced H800 chips. An app powered by the V3 model became the top iPhone download in the U.S. on Monday. The startup founded in 2023 has said its AI models either match or outperform top U.S. rivals at a fraction of the cost, challenging the view that scaling AI requires vast computing power and investment. Such a business need has powered an increase of around $10 trillion in the market value of "Magnificent Seven" companies since ChatGPT kicked off the AI boom in November 2022. "Did DeepSeek really build OpenAI for $5 million? Of course not," Bernstein analyst Stacy Rasgon said. "It seems like a stretch to think the innovations being deployed by DeepSeek are completely unknown by the top tier AI researchers at the world's other numerous AI labs." DeepSeek's pricing blows away anything from the competition, he said. Shares of AI chip pioneer Nvidia sank 16%, Microsoft fell 3.8% and TSMC's U.S. stock tumbled 14%. Rasgon and other analysts argue DeepSeek's training costs for its V3 model could be higher as the nearly $6 million cited by the startup only includes the amount spent on computing power, while little is known about the costs to build the more publicized R1 model. Still, it is a far cry from the $250 billion analysts estimate big U.S. cloud companies will spend this year on AI infrastructure. That spending has been questioned by investors worried about slow returns in the past year. With most of the American tech giants set to report results this week and the next, analysts and investors expect executives of the companies to offer more clarity on their strategy. "(DeepSeek's rise) puts into question whether the current pace of capex spend/technology upgrades is necessary. Commentary from U.S. hyperscalers will be key this week to see if they remain aggressive with AI spend," CFRA analyst Angelo Zino said. "They will likely stress the need for greater computing power as we shift toward agentic AI and physical AI," Zino added, referring to autonomous AI agents that require little human intervention for routine tasks, as well as robots and self-driving cars. PRICING PUSH While the price of using AI models has been falling with rising competition and the progress in the technology, Bernstein's Rasgon said DeepSeek stands out as it has priced its models at up to 40 times lower than OpenAI's comparable models. That could, analysts said, start a price war for AI services, potentially pressuring tech companies such as OpenAI that are already losing billions of dollars each year due to the high operational costs of running services such as ChatGPT. "If DeepSeek adoption intensifies, it could initiate price reductions from competitors who have similar open source products," said Gadjo Sevilla, senior analyst at eMarketer. "Market leaders like OpenAI (pushing for profitability) are unlikely to lower pricing in the short term. They will likely double down on trust and safety as key differentiating features, which happen to matter to enterprise users." Some experts also doubt that U.S. businesses would be willing to embrace Chinese AI technology, given Sino-U.S. tensions and concerns about data privacy and security. DeepSeek has said it stores user information in servers in China, which could be a sticking point in its U.S adoption. Some investors, however, believe American tech giants would pounce on DeepSeek's breakthroughs and that cheaper AI services are bound to increase technology adoption, which could lift demand for chips. "Did DeepSeek seek and find a more efficient processing model for AI? Maybe, but you can count on the incumbents to adopt any new techniques found," said Mark Malek, chief investment officer at SiebertNXT. "(This) would only make the AI opportunity bigger in the future." (Reporting by Aditya Soni and Zaheer Kachwala in Bengaluru; Editing by Arun Koyyur)

Is DeepSeek 'doomsday' for AI infra? Bernstein weighs in By Investing.com

Investing.com-- Chinese artificial intelligence firm DeepSeek launched a set of new open source models over the past week claiming to match offerings from rivals such as OpenAI for a fraction of their cost. The launch and subsequent testing of the company's flagship model- DeepSeek R1- sparked questions over just how much of the recent capital expenditure on building AI infrastructure, which has stretched into hundreds of billions of dollars among U.S. majors- was justified. Bernstein analysts noted that the new models were impressive, in their ability to compete with leading models from OpenAI and Meta (NASDAQ:META), while claiming to use a fraction of the investment and chip infrastructure used by their competitors. They dismissed the claims that DeepSeek built OpenAI for $5 million, and that broader market panic over the models appear overblown. "If we acknowledge that DeepSeek may have reduced costs of achieving equivalent model performance by, say, 10x, we also note that current model cost trajectories are increasing by about that much every year anyway (the infamous "scaling laws...") which can't continue forever," Bernstein analysts wrote in a note. They noted that the AI industry needed innovations like DeepSeek to keep progressing, in that it could squeeze more performance out of existing hardware. The brokerage noted that the need for increased AI infrastructure still persisted, on the belief that any new computing capacity was likely to get absorbed by increased AI demand. Bernstein recommended not buying into the "doomsday scenarios currently playing out in the Twitterverse," and that the brokerage still recommended NVIDIA Corporation (NASDAQ:NVDA) and Broadcom Inc (NASDAQ:AVGO) (both rated Outperform) for their AI prospects. Market darling Nvidia fell sharply on Friday and appeared poised to extend losses on Monday amid concerns that innovations like DeepSeek will necessitate lesser investment in AI infrastructure. Wall Street futures also fell sharply on Monday, with losses biased towards tech stocks on doubts over future AI investment.

European chipmakers slump as traders gauge DeepSeek AI model By Investing.com

Investing.com - Shares in European chipmaking and data center-exposed stocks tumbled on Monday as investors fretted over the implications of the release of a new artificial intelligence model from Chinese firm DeepSeek. The start-up has launched a free assistant to rival that of OpenAI's ChatGPT, with the group saying that its technology offers similar performance despite using cheaper chips and less data. On Monday, DeepSeek's large language model was the best-rated free application on Apple (NASDAQ:AAPL)'s App Store in the US. Although some doubts have been cast over DeepSeek's claims, the model has still sparked market worries over a long-standing wager that AI will fuel a chain of demand stretching from semiconductors to data centers. The release and subsequent testing of DeepSeek's flagship model also raised questions around a surge in recent massive capital spending by US tech giants on building out their AI infrastructure -- and the potential returns investors want to see from such heavy investment. "DeepSeek clearly doesn't have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive," analysts at Raymond (NSE:RYMD) James said in a note to clients. "The natural question is, how would DeepSeek's emergence impact compute intensity growth and the demand for hardware/semiconductors?" However, they flagged that there remains "very limited information" around DeepSeek's product. In European trading, ASML (AS:ASML), the Dutch computer equipment maker whose clients include Intel (NASDAQ:INTC), Samsung (KS:005930), and Taiwan's TSMC, was under particular pressure. Meanwhile, peers ASM International (AS:ASMI) and BE Semiconductor Industries (AS:BESI) slumped by more than 8%, and Schneider Electric (EPA:SCHN), Munters Group (ST:MTRS), and Siemens Energy (ETR:ENR1n) also declined sharply. Frankfurt-listed shares in Nvidia (NASDAQ:NVDA), which has been propelled by enthusiasm around AI in recent years to become one of the world's most valuable companies, retreated by over 8% as well. In premarket US trading, the stock decreased heavily.

Chinese AI DeepSeek gains attention

It all stemmed from a free AI assistant launched by Chinese startup DeepSeek, which the firm said uses less data at a fraction of the cost of services currently available. Global technology shares recovered some poise on Tuesday but remained vulnerable after a rout sparked by the emergence of a low-cost Chinese artificial intelligence model, which made investors question the sky-high valuation and dominance of AI bellwethers. Shares of chipmaker Nvidia, the poster child of the AI boom in recent years, fell 17% on Monday, wiping $593 billion from its market value - a record one-day loss for any company - and dragging US stocks lower. By Tuesday, Nvidia shares were up nearly 6% in Frankfurt, while those in Oracle rose 3.4% and AI data analytics company Palantir rose 2.97%. It all stemmed from a free AI assistant launched by Chinese startup DeepSeek last week, which the firm said uses less data at a fraction of the cost of services currently available. That garnered attention worldwide, although skepticism lingers. OpenAI CEO Sam Altman called it an "impressive model." "We will obviously deliver much better models and also it's legit invigorating to have a new competitor!," Altman, the head of the AI firm behind ChatGPT, said in a social media post. The launch and increasing popularity of DeepSeek spurred investors to dump tech stocks globally, with ripples felt from Tokyo to Amsterdam to Silicon Valley. Markets in tech-heavy South Korea and Taiwan are closed for the next few days for Lunar New Year. Mainland China is closed until Feb. 4, leaving the spotlight firmly on Japanese firms. On Tuesday, chip-testing equipment maker Advantest, a supplier to Nvidia, lost 10% after diving nearly 9% on Monday. Chip-making equipment maker Tokyo Electron and technology start-up investor SoftBank Group slid 5%. Advertisement "It's clearly a sell first, ask questions later approach, and we've actually seen that kind of move in the past in Japan," said Kei Okamura, a portfolio manager at Neuberger Berman, referring to a global market meltdown in August headlined by Japan's Nikkei. Stay updated with the latest news! Subscribe to The Jerusalem Post Newsletter Subscribe Now In Europe on Tuesday, shares in the Dutch semiconductor company, which closed down 7.1% on Monday, opened up 0.9%, while shares in BE Semiconductor rose 1.2%. Over in the US, Broadcom finished down 17.4%, while ChatGPT backer Microsoft fell 2.1% and Google parent Alphabet closed down 4.2%. The Philadelphia Semiconductor Index tumbled 9.2%, for its deepest percentage drop since March 2020. No margin of error The selloff has brought into the spotlight the crowded positioning among investors and the billions of dollars US tech giants are pouring in to develop AI capabilities, as well as the extremely high valuation of some of these firms. "What makes Monday's tech selloff so jarring is that the valuations of many of these AI and tech companies offer no margin of error," said David Bahnsen, chief investment officer at The Bahnsen Group. "The excessive weighting these tech stocks have in many investor portfolios and the high concentration these tech stocks have in the market indices was a significant and under-appreciated risk issue." The hype around AI has powered a huge flow of capital into equities, inflating valuations and lifting stock markets to record highs, leading to an increase of around $10 trillion in the market value of "Magnificent Seven" companies since ChatGPT kicked off the AI boom in November 2022. It is not just the chipmakers and tech companies but also companies focused on data centers that are taking a hit, with Malaysia's utility conglomerate YTL Power down 9% on Tuesday, its third session of steep loss. "We're still, like many investors, gathering information," said Neuberger Berman's Okamura, noting that a lot of investors are scrambling to gather more information and decide their next move. "I think we're going to see many more of these (developments) going forward. And we've seen technological advancements like this that have had implications for cost spend." Investor focus will be on the flurry of tech earnings this week, with executives likely keen to calm frayed nerves and ease concerns about capital spending. AI race Little is known about the Hangzhou startup behind DeepSeek, whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer, records showed. Its researchers wrote in a paper last month that its DeepSeek-V3 model, launched on Jan. 10, used Nvidia's lower-capability H800 chips for training at a cost of less than $6 million. The launch and the popularity of the app contrasts with the lackluster reception that met the Chinese ChatGPT equivalent made by search engine giant Baidu, which exposed the gap in AI capabilities between US and Chinese firms. The quality and cost efficiency of DeepSeek's models have flipped this narrative on its head and prompted a warning from US President Donald Trump, who called it "a wakeup call for our industries." Japan's digital minister, Masaaki Taira, said DeepSeek's emergence had upended the conventional wisdom that Chinese AI was years behind. "It's been said that Chinese generative AI might be about five years behind, but that turned out to be wrong, and it seems to be on a fairly good track," Taira said, adding that Japan was taking a closer look into suggestions that Chinese AI may be more cost-effective. Sign up for the Business & Innovation Newsletter >>

Big Tech Faces Heat as China's DeepSeek Sows Doubts on Billion-Dollar Spending

(Reuters) - Chinese startup DeepSeek's cheaper AI is sharpening investor scrutiny of the billions U.S. tech giants are pouring to develop the technology and analysts say it will dominate this week's much-awaited results from industry bellwethers. DeepSeek has claimed it took just two months and cost under $6 million to build an AI model using Nvidia's less-advanced H800 chips. An app powered by the V3 model became the top iPhone download in the U.S. on Monday. The startup founded in 2023 has said its AI models either match or outperform top U.S. rivals at a fraction of the cost, challenging the view that scaling AI requires vast computing power and investment. Such a business need has powered an increase of around $10 trillion in the market value of "Magnificent Seven" companies since ChatGPT kicked off the AI boom in November 2022. "Did DeepSeek really build OpenAI for $5 million? Of course not," Bernstein analyst Stacy Rasgon said. "It seems like a stretch to think the innovations being deployed by DeepSeek are completely unknown by the top tier AI researchers at the world's other numerous AI labs." DeepSeek's pricing blows away anything from the competition, he said. Shares of AI chip pioneer Nvidia sank 16%, Microsoft fell 3.8% and TSMC's U.S. stock tumbled 14%. Rasgon and other analysts argue DeepSeek's training costs for its V3 model could be higher as the nearly $6 million cited by the startup only includes the amount spent on computing power, while little is known about the costs to build the more publicized R1 model. Still, it is a far cry from the $250 billion analysts estimate big U.S. cloud companies will spend this year on AI infrastructure. That spending has been questioned by investors worried about slow returns in the past year. With most of the American tech giants set to report results this week and the next, analysts and investors expect executives of the companies to offer more clarity on their strategy. "(DeepSeek's rise) puts into question whether the current pace of capex spend/technology upgrades is necessary. Commentary from U.S. hyperscalers will be key this week to see if they remain aggressive with AI spend," CFRA analyst Angelo Zino said. "They will likely stress the need for greater computing power as we shift toward agentic AI and physical AI," Zino added, referring to autonomous AI agents that require little human intervention for routine tasks, as well as robots and self-driving cars. PRICING PUSH While the price of using AI models has been falling with rising competition and the progress in the technology, Bernstein's Rasgon said DeepSeek stands out as it has priced its models at up to 40 times lower than OpenAI's comparable models. That could, analysts said, start a price war for AI services, potentially pressuring tech companies such as OpenAI that are already losing billions of dollars each year due to the high operational costs of running services such as ChatGPT. "If DeepSeek adoption intensifies, it could initiate price reductions from competitors who have similar open source products," said Gadjo Sevilla, senior analyst at eMarketer. "Market leaders like OpenAI (pushing for profitability) are unlikely to lower pricing in the short term. They will likely double down on trust and safety as key differentiating features, which happen to matter to enterprise users." Some experts also doubt that U.S. businesses would be willing to embrace Chinese AI technology, given Sino-U.S. tensions and concerns about data privacy and security. DeepSeek has said it stores user information in servers in China, which could be a sticking point in its U.S adoption. Some investors, however, believe American tech giants would pounce on DeepSeek's breakthroughs and that cheaper AI services are bound to increase technology adoption, which could lift demand for chips. "Did DeepSeek seek and find a more efficient processing model for AI? Maybe, but you can count on the incumbents to adopt any new techniques found," said Mark Malek, chief investment officer at SiebertNXT. "(This) would only make the AI opportunity bigger in the future." (Reporting by Aditya Soni and Zaheer Kachwala in Bengaluru; Editing by Arun Koyyur)

Nvidia (NVDA) Stock Price Dips 12% Erasing $400B From Market Cap, What's Next?

The recent tech market rout comes as China's DeepSeek challenges US dominance in the AI sector. Nvidia (NVDA) Stock price has caught the eyes of investors, with around 12% dip today in the pre-market trading session. Notably, the slump comes amid a broader tech market rout, with most of the AI stocks trading in the red. This massive selling pressure in the broader technology market comes amid China's AI startup DeekSeek raised questions over the US's dominance in the tech segment. Nvidia's dramatic dip reflects growing uncertainty in the US tech sector. Chinese AI startup DeepSeek unveiled a new model that rivals offerings from US tech leaders like OpenAI and Meta. The model, developed at a fraction of the cost, has taken the industry by storm, raising questions about the sustainability of US dominance in the tech sector. Meanwhile, DeepSeek's latest model, DeepSeek-V3, reportedly outperformed OpenAI's latest version in third-party tests. A flurry of recent reports highlighted its soaring popularity, with the app ranking at the top of Apple's App Store. This low-cost breakthrough is pressuring AI chipmakers, including Nvidia, whose stock dropped nearly 12% in the pre-market session. Nvidia stock isn't the only tech player facing turbulence. Chip giants ASML and AMD also recorded steep losses, with shares tumbling by 4-10%. Notably, all these companies have benefited from the AI boom but now face increased skepticism due to cost-efficient competition. Also, other tech and crypto stocks have witnessed a sharp decline today. Meanwhile, DeepSeek's emergence highlights the growing importance of affordability in AI innovation. Its $5.6 million development cost is significantly lower than the budgets of US tech giants. Analysts predict this shift may lead to increased pressure on traditional AI chipmakers to lower costs or innovate further, further impacting the Nvidia stock price ahead. In addition, these advancements have also cast doubt on major US AI initiatives, such as Donald Trump's Stargate AI project. The project, involving Oracle, OpenAI, and others, plans a $500 billion investment in American AI infrastructure. Critics argue that the emergence of affordable alternatives like DeepSeek could diminish the project's relevance. Nvidia (NVDA) stock price was down 11.81% and exchanged hands at $125.84 in the pre-market trading session on Monday. If this decline continues, it could potentially erase around $400 billion from Nvidia's market cap, which currently stands at $3.09 trillion. Notably, the stock closed at $142.62 in the previous session. Meanwhile, this massive slump in NVDA stock has also impacted the crypto market, especially triggering a AI coins crash today. Besides, this crash also reflects the ever-evolving dynamics in the technology sector. As low-cost models disrupt the market, Nvidia may have to evolve its business mode or adjust its pricing strategies. The leading financial newsletter The Kobeissi Letter highlighted the recent slump, saying "DeepSeek is CRUSHING US Stocks." The report noted that Nasdaq 100 Futures lost 1,000 points, its largest loss since September 2022. Simultaneously, Nvidia's $400 billion market cap decline, if happens, will mark it as the "biggest 1-day loss in a stock in HISTORY."

Nvidia Responds to Getting Hit in Face With Shovel

AI chipmaker Nvidia has finally broken its silence following the firm setting a new record for the biggest single-day loss of any company in history. Chinese startup DeepSeek made a major splash over the last few days, claiming that its AI chatbot can rival the best OpenAI has to offer but at a tiny fraction of the cost. It also happens to be open source and free for all to use. The announcement sent ripples across the industry, sparking a global selloff. The tech sector overall is on track for a "$1 trillion wipeout." Nvidia, which develops and sells the chips AI companies use to train their increasingly compute-intensive models, has chosen the high road -- even after the startup eviscerated its stock. "DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling," an Nvidia spokesperson told CNBC today. Put simply, test time scaling refers to a new trend in the AI world allowing models to test and verify different responses before arriving at a final answer, a primitive form of "reasoning" that can lead to more reliable answers. Both OpenAI's o1 model and DeepSeek's latest R1 model make use of forms of test-time scaling. "DeepSeek's work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant," the spokesperson added. It's a strikingly measured response, considering the sheer amount of money at stake. Further complicating the situation is that DeepSeek is reportedly making use of a capped version of Nvidia's ever-popular H100 AI chip, called the H800, which was designed for the Chinese market. That's despite the US government banning the export of both chips in late 2023. Today's stock bloodbath highlighted widespread skepticism over soaring costs in the AI industry. Just last week, US president Donald Trump touted an AI infrastructure project dubbed Stargate, which aimed to raise $500 billion in just four years, with Meta CEO Mark Zuckerberg committing to spending $60 billion of his own on AI this year. But DeepSeek's claims have investors spooked, leading to some tough questions: have they been massively overspending? And when will generative AI actually break even, if ever? Some analysts are hopeful that DeepSeek's advancements could clear a slightly less murky path to profitability. "If model training costs prove to be significantly lower, we would expect a near-term cost benefit for advertising, travel, and other consumer app companies that use cloud AI services, while long-term hyperscaler AI-related revenues and costs would likely be lower," Bank of America Securities analyst Justin Post wrote in a note, as quoted by CNBC. Nvidia's statement doesn't appear to have immediately calmed investors. The company's shares have yet to rebound, cementing a catastrophic 16 percent loss (although to put the ascendant AI sector in perspective, that's just four months of gains.) DeepSeek's explosion onto the scene has left a massive black eye, and OpenAI is likely still reeling from the whiplash. CEO Sam Altman has been noticeably quiet since DeepSeek rocketed past ChatGPT to score the top iPhone App Store spot. In short, the dust hasn't even begun to settle as investors are forced to do some serious soul-searching.

How U.S. efforts to restrict China from Nvidia's fastest chips may have backfired

DeepSeek's rattling of the artificial intelligence market has been several years in the making, with analysts viewing the Chinese company's shocking advance in the field as an unintended consequence of U.S. trade policy. Starting under the Biden administration in 2022, the U.S. has imposed export controls to keep China from accessing high-performance semiconductors, primarily from Nvidia . The intention was to keep a technological edge in artificial intelligence and supercomputer-related technologies. In response, China started creating its own, cheaper chips that came to fruition with DeepSeek, which recently drew attention for its ability to replicate AI functions at a much cheaper cost. Though the U.S. in 2023 tightened policy further in response to the modified chips, that didn't stop DeepSeek from moving forward. Commentary over the past several days from industry leaders sent U.S. markets into a tailspin Monday on fears that disruption from DeepSeek could upend a central Wall Street theme that's relied on Nvidia and related companies to power the market since late 2022 whn ChatGPT debuted. China innovation "Investors are concerned that rather than impede China's progress in AI, the U.S. restrictions have engendered innovation that has enabled the development of a model that prioritizes efficiency," JPMorgan Chase analyst Sandeep Deshpande said in a Monday note. The implications could be significant, but ultimately not all negative for the state of AI in the U.S. and how future developments affect industries. Investors could find buying opportunities in beaten-down companies, while the rise of more cost-efficient technologies opens up the market in other technology, such as notebooks and smartphones. But more immediately, investors are re-examining the valuation of Nvidia, which trades at 32 times its next 12 months estimated earnings, and whose shares tumbled as much as 18% Monday. NVDA 1D line Nvidia shares on Monday "What makes Monday's tech selloff so jarring is that the valuations of many of these AI and tech companies offer no margin of error," said David Bahnsen, chief investment officer at Bahnsen Group. "Excessive valuation always becomes a problem, eventually, but fundamental news becomes a heightened problem when it is combined with excessive valuation." The road ahead Key to the road ahead will be the extent to which China becomes a bigger player in the AI market and how that plays out not only for Nvidia, but also other companies that are developing their own products and others that are counting on generating the massive amounts of energy required to power the technology. "Attempts to limit China's access to U.S. technology, in this case chips and chip equipment, have very likely incentivized China to develop on their own, and become more independent of U.S. capabilities in the process," Bahnsen said. "China may not only go away as a customer, but may become the #1 competitor as well." If nothing else, the latest developments raise more questions about being able to make money from AI, a critical point that has proven largely elusive so far. Investors could be unwilling to approve additional capital expenditures for AI unless monetization improves. Also, the U.S. may have to look at its own policies that have sought to manage the spread of AI over industries and around the globe. President Donald Trump has been an outspoken advocate of AI, with close adviser Elon Musk a developer in the field with his xAI product. "Trump/Musk likely recognize the risk of further restrictions is to force China to innovate faster," Jefferies analysts said in a note. "Therefore, we think it likely Trump will relax the AI Diffusion policy ."

'DeepSeek' Bombshell Has Big Tech In Deep Trouble

A new AI model called DeepSeek claims to deliver similar performance to extremely expensive AI models for 1/10th of the cost and far fewer Nvidia chips and energy consumption. Big tech companies have spent hundreds of billions of dollars on AI infrastructure over the past two years as part of an AI and data center arms race. OpenAI alone was expected to lose $44 billion before investors expected the Author and entrepreneur. My articles typically cover macroeconomic trends, portfolio strategy, value investing, and behavioral finance. I like to profit from the biases and constraints of other investors.You can read some more of my work for free here. Analyst's Disclosure: I/we have a beneficial long position in the shares of BRK.B, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Why Artificial Intelligence (AI) Hardware Winners Taiwan Semiconductor, Marvell, and Arista Networks Plunged by Double Digits Today | The Motley Fool

The obvious reason for the sell-off is last week's release of the AI reasoning model DeepSeek V3 R1. Over the weekend, it became apparent that DeepSeek, a little-known Chinese AI lab, had built a leading frontier AI model with significantly less computing power than had been thought necessary. That led most AI hardware names, many of which were trading at high valuations, to sell off hard. But how much of a risk does this new model really pose? DeepSeek is a Chinese AI lab that has been in operation since 2023. It was spun out of a quantitative hedge fund called High-Flyer, founded in 2015 by entrepreneur Liang Wenfeng. DeepSeek released the large language model V3 in December, but on January 20, it released the "reasoning" version of the model, called R1. By several metrics, R1 met or exceeded the latest OpenAI reasoning model, called o1. And DeepSeek was able to do it at just a fraction of the cost of o1, with computing power limited by 2022 and 2023 U.S. trade restrictions on leading AI GPUs. We are talking about one-tenth to one-thirtieth of the cost of models built by OpenAI and other "Magnificent Seven" names. DeepSeek's public paper on R1 explains how the company cleverly used a variety of hacks to derive tremendous results from limited hardware. Over the weekend, its solutions withstood scrutiny by experts. In response, major AI hardware stocks are selling off. The thinking is that companies will now be able to spend less on AI infrastructure to build leading-edge models. Given the high valuations at which some AI hardware stocks were trading on the expectation of future growth, it's no surprise these stocks are selling off today. This could be bad news for Taiwan Semiconductor, which has a virtual monopoly on the production of leading-edge processors for AI. Taiwan Semi just posted blowout earnings and raised expectations for capital investment in the year ahead, and its valuation had risen to over 30 times earnings heading into today. Meanwhile, Marvell makes a variety of chips in AI infrastructure, including custom AI chips for the in-house designs of major cloud computing customers and a variety of networking and optical chips for data center communications. Marvell's stock rocketed 83% in 2024 and came into today trading at a whopping 46 times this year's adjusted earnings estimates. Arista is also a leading data center networking company that builds high-performance switches. It too had a fine 2024, up 88%, and came into the day trading at 62 times earnings on the expectation of massive future AI data center buildouts. Given these companies' high valuations, it's no surprise that the DeepSeek model and the doubts it brings to AI hardware spending caused a sharp correction. Some Wall Street analysts think the pullback is a buying opportunity for AI-focused hardware stocks. The analysts cite two major reasons. Some believe that DeepSeek's advertised cost is below the actual cost of running the company. Others believe DeepSeek may have unauthorized access to Nvidia (NVDA -16.79%) H100 chips. However, many in the industry believe DeepSeek's numbers and the claims outlined in its paper. But if the cost to train and run AI models comes down materially, some say that will trigger a windfall of AI usage and demand -- meaning more profit for AI hardware stocks, not less. But it's also possible that the rise in demand could be for inferencing hardware, which uses AI models in the real world. Up until now, hardware for training AI models has dominated spending. Therefore, investors may need to shift their focus. And as always, high valuations increase risk should anything go wrong. Investors are certainly learning a lesson in the importance of valuation today, even for high-performing companies.

AI infrastructure, energy stocks crash amid DeepSeek capex implications By Investing.com

Investing.com -- Shares of AI infrastructure companies plummeted on Monday as investors responded to news that China's DeepSeek has developed a highly efficient open-source language model, potentially impacting future capital expenditures in the AI industry. The innovative model, which rivals the performance of GPT-4 with significantly less computing power, has introduced uncertainty regarding the growth of demand for computing power. The architecture of DeepSeek's model, which combines Mixture of Experts (MoE) and Meta-Learning Algorithms (MLA) with high-quality parameter processing, has set a new precedent for model efficiency. This development could prompt the AI sector to prioritize return on investment (ROI) more heavily, leading to a reassessment of necessary computing power. As a result, projections for AI-related capital expenditures in 2026 are now being questioned, with potential declines or stagnation on the horizon. GE Vernova, Constellation Energy (NASDAQ:CEG) Corp., Vistra Corp., and Ciena (NYSE:CIEN) Corp. all experiencing significant drops in their stock prices, with Vertiv shares down as much as 14%. Jefferies analyst Edison Lee commented on the situation, stating, "The market naturally will worry about demand growth in computing power."

China's AI breakthrough threatens the American exceptionalism premium on U.S. stocks

And just like that, the artificial intelligence trade that has driven stocks to all-time highs is showing signs of cracking. Futures tied to the S & P 500 and Nasdaq-100 shed 2% and 3%, respectively early Monday, as concerns mount over the sudden emergence of DeepSeek, a Chinese AI startup. Dow Jones Industrial Average futures lost about 300 points, or 0.7%. DeepSeek last week released an open source AI model that reportedly outperformed OpenAI on several tests. But here's the kicker: The company had launched in December a model that took just two months to develop and cost less than $6 million. That's a fraction of what many major tech companies are spending to develop their AI capabilities and components. That comparison and what it means for future demand drove down Nvidia shares by 11% . Fellow chipmakers Marvell Technology and Broadcom also suffered in the selloff, while Microsoft and Amazon lost 3% each and Meta Platforms slipped 1%. "Market panics are common, and currently, it is understandable with American exceptionalism in full force," wrote Manish Kabra, strategist at Societe Generale. "The S & P 500 excluding the Mag-5s would be 12% lower today. Nvidia alone has contributed 4% to the performance of the S & P 500. This is what we find to be the 'American exceptionalism' premium on the S & P 500." Indeed, the S & P 500 is up 24% over the past year, while the rest of the world's stocks, as measured by the iShares MSCI ACWI ex-U.S. ( ACWX ) exchange-traded fund has risen just 7% in that time. "Thus far, the market has handsomely rewarded BOTH the companies spending on AI (think AMZN, MSFT, GOOGL, OpenAI etc) and the companies providing the picks-and-shovels," Goldman Sachs' trading desk wrote. "This story is shaking investor confidence in the broader complex, primarily as the alleged low cost of the DeepSeek model calls into question the need for the same type of spending/investing moving forward." To be sure, some on the Street see this as an opportunity to scoop up some of the biggest names in the market at a discount. Bernstein analyst Stacy Rasgon maintained his outperform ratings on both Nvidia and Broadcom, noting: "DeepSeek doomsday for AI buildouts? We don't think so ... we believe that 1) DeepSeek DID NOT 'build OpenAI for $5M'; 2) the models look fantastic but we don't think they are miracles; and 3) the resulting Twitterverse panic over the weekend seems overblown." Elsewhere Monday morning on Wall Street, UBS upgraded Take-Two Interactive to buy from neutral, calling for big gains thanks to the imminent release of "Grand Theft Auto VI". The bank expects "the hype to build in '25, fueled by new announcements, trailers and gameplay," said analyst Christopher Schoell. "We believe this will drive sentiment, similar to the stock's historical outperformance ahead of major releases, and build confidence in TTWO's multi-year profit/FCF ramp."

DeepSeek updates - US tech stocks drop as Chinese AI chatbot sparks market turmoil

White House press conferences are nice, but downloads are the true coin of the realm in tech. Right now, the newest AI model by China's DeepSeek tops the charts on Apple's App Store in the US. The release has sent AI-related stocks like Nvidia and Oracle into a tailspin. Just last week, Oracle's Larry Ellison was standing next to Trump alongside SoftBank's Masa Son and OpenAI CEO Sam Altman announcing Stargate. The joint venture involves $100bn (£801m) in private investment to build critical infrastructure including data centres that have powered the AI revolution. That starting investment is set to grow to a whopping $500 billion over the next few years. For years, we've been hearing that ever more capital and energy are required to ensure the US doesn't fall behind China. The US has seen to it that China can't access some of the most advanced chips made by Nvidia. But DeepSeek's sudden ascendance has thrown a wrench into the AI race. China appears to have pulled off this triumph on a shoestring compared to the resources its American counterparts have to work with.

Nvidia, AMD, Broadcom, SMCI, TSMC And Other Tech Giants Lead Monday Pre-Market Selloff As Nasdaq 100 Futures Plummet Over 650 Points Amid Reports Of Chinese AI Startup DeepSeek Overtaking ChatGPT - Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD)

Major technology stocks plunged in Monday's pre-market trading after Chinese artificial intelligence startup DeepSeek unveiled an AI model that reportedly matches OpenAI's ChatGPT capabilities at a fraction of the cost, threatening U.S. technological leadership. What Happened: NVIDIA Corp NVDA led the decline, falling 8.15% to $131.00 in pre-market trading. Other chip manufacturers followed, with Broadcom Inc. AVGO down 8.66%, Super Micro Computer Inc. SMCI dropping 8.03%, and Taiwan Semiconductor Manufacturing Company TSM declining 7.66%. Advanced Micro Devices Inc. AMD shed 4.89%, while Micron Technology Inc. MU lost 6.00%. Intel Corp INTC and Qualcomm Inc. QCOM showed relatively smaller declines of 2.45% and 2.28%, respectively. The selloff extended to major tech companies, with Microsoft Corp MSFT falling 3.30%, Meta Platforms Inc. META down 3.22%, and Alphabet Inc. GOOGL GOOG declining over 3%. DeepSeek's R1 language model, released as open-source last week, reportedly achieves performance comparable to OpenAI's models while requiring significantly less computing power. The startup claims to use approximately 50,000 Nvidia H100 GPUs, raising questions about the necessity of massive GPU investments that have driven chip stocks' valuations. See Also: 'Mini Financial Crisis' For Crypto Incoming? Arthur Hayes Predicts Bitcoin Dropping To $75K Before Skyrocketing To $250K By Year-End Why It Matters: Scale AI CEO Alexandr Wang called DeepSeek "a wake-up call for America" on social media platform X, emphasizing the need for the U.S. to accelerate innovation while strengthening chip export controls. According to The Kobeissi Letter, U.S. markets are set to erase over $1 trillion in market capitalization during Monday's session, with Nasdaq 100 futures plunging 662.50 points or 3.2%, and S&P 500 futures dropping 1.9% as of early morning trading. The development comes at a crucial time as markets await the Federal Reserve's meeting this week and major earnings reports. DeepSeek's breakthrough particularly threatens Nvidia's market position, as the company's chips have been considered essential for advanced AI development. Adding to market pressure, billionaire investor Chamath Palihapitiya highlighted that DeepSeek has achieved step-by-step reasoning without requiring massive supervised datasets, potentially marking a significant advancement in AI technology. Read next: Bitcoin, Ethereum, Dogecoin Fall With Stock Futures Amid Trump Tariff War, DeepSeek Hype: Top Trader Predicts Bitcoin's Upside To $122,000 Image Via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image Via Shutterstock AMDAdvanced Micro Devices Inc$118.94-3.17%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewAVGOBroadcom Inc$224.00-8.46%GOOGAlphabet Inc$195.50-3.17%GOOGLAlphabet Inc$193.99-3.11%INTCIntel Corp$20.57-1.25%METAMeta Platforms Inc$623.92-3.64%MSFTMicrosoft Corp$428.16-3.58%MUMicron Technology Inc$96.30-6.68%NVDANVIDIA Corp$131.29-7.94%QCOMQualcomm Inc$168.65-2.01%SMCISuper Micro Computer Inc$30.48-8.39%TSMTaiwan Semiconductor Manufacturing Co Ltd$205.00-7.61%Market News and Data brought to you by Benzinga APIs

Tech shares knocked by shock rise of Chinese AI chatbot DeepSeek | BreakingNews.ie

Global tech stocks are expected to be hit on Monday following the surprise emergence of a Chinese rival in the AI chatbot space. Futures trading is pointing to heavy falls in tech and AI stocks in the US when Wall Street opens on Monday. Shares in AI-related firms based in the US such as Nvidia, Microsoft and Meta are all down on Monday morning ahead of the US markets opening. The drop has been sparked by the sudden rise of Chinese AI chatbot app DeepSeek, which has jumped to the number two spot on the download charts on Apple's App Store in Ireland and the top spot in the UK, US and China, sparking a rethink of the landscape of the AI sector. Until now, the US - home to OpenAI's ChatGPT and Google's Gemini, but also many other leading tech firms working on AI technology - has been seen as unmovable as the global leader in AI. But DeepSeek's sudden emergence, and claims of performance on par with ChatGPT despite reportedly having been developed for a fraction of the cost, is leading to a re-evaluation of the AI market.

Tech Stocks Tumble On AI Nightmare, Nvidia Eyes Worst Day Since March 2020, Bitcoin Drops Below $100,000: What's Driving Markets Monday? - Apple (NASDAQ:AAPL)

Nvidia loses $450B, leading the Magnificent Seven's $600B market wipeout, marking its worst session since March 2020. A wild selloff rattled tech stocks on Monday, striking at the heart of AI optimism as China's DeepSeek startup unveiled an open-source large language model platform that outperforms OpenAI's ChatGPT at a fraction of the cost. The shockwave hit U.S. markets hard, raising fears over intensifying AI competition just as companies pour heavy investments into the new technology. The elite Magnificent Seven stocks collectively shed about $600 billion in market value, with Nvidia Corp. NVDA alone erasing $450 billion, or 15% of its valuation. The AI powerhouse is on track for its worst single-day loss since March 18, 2020. The Nasdaq 100 tumbled 3%, eyeing its steepest drop since Dec. 18, when hawkish comments from Fed Chair Jerome Powell rattled markets. The iShares Semiconductor ETF SOXX plunged over 7%, also eyeing its worst session since the pandemic-driven selloff of March 2020. Chipmakers took a beating, with Broadcom Inc. AVGO and Marvell Technology Inc. MRVL both crashing 17.5%, while Micron Technology Inc. MU sank 11%. As panic spread, investors sought refuge in safe-haven Treasury assets. Treasury yields slid, with the 10-year yield falling 7 basis points to a one-month low. The U.S. 10-Year Treasury Note ETF UTEN rose 0.7%. The tech turmoil even bled into crypto markets, dragging Bitcoin BTC/USD back below $99,000. The world's largest cryptocurrency lost $110 billion in market cap within hours as risk-off sentiment took hold. Monday's Performance In Major US Indices, ETFs According to Benzinga Pro data: The SPDR S&P 500 ETF Trust SPY fell 1.9% to $596.73. The SPDR Dow Jones Industrial Average DIA inched 0.2% higher to $445.05. The tech-heavy Invesco QQQ Trust Series QQQ dropped 3.4% to $511.88. The iShares Russell 2000 ETF IWM fell 1% to $226.47. The Consumer Discretionary Select Sector SPDR Fund XLP outperformed, up 2.2%; the Technology Select Sector SPDR Fund XLE tumbled, down 5.3%. Monday's Stock Movers AT&T Inc. T soared 6.5% in reaction to stronger-than-expected earnings. SoFi Technologies Inc. SOFI plummeted 12% as a downbeat guidance darkened better-than-expected quarterly results. Crypto-related stocks such as MicroStrategy Inc. MSTR and Coinbase Global Inc. COIN fell by 7.8% and 9.6%, respectively. Apple Inc. AAPL rallied 3%, defying the broader tech selloff. Read now: RTX, Lockheed Martin Report Q4 Earnings Tuesday: DOGE Concerns, NATO Spending On Watch Photo: Shutterstock $BTCBitcoin$99564.70-2.95%WatchlistOverviewAAPLApple Inc$230.793.60%AVGOBroadcom Inc$199.77-18.4%COINCoinbase Global Inc$269.50-9.56%DIASPDR Dow Jones Industrial Average ETF$444.970.19%IWMiShares Russell 2000 ETF$226.36-1.02%MRVLMarvell Technology Inc$102.31-17.5%MSTRMicroStrategy Inc$329.67-6.79%MUMicron Technology Inc$90.41-12.4%NVDANVIDIA Corp$119.42-16.3%QQQInvesco QQQ Trust, Series 1$512.29-3.27%SOFISoFi Technologies Inc$15.77-12.0%SOXXiShares Semiconductor ETF$211.65-8.23%SPYSPDR S&P 500$596.65-1.86%TAT&T Inc$24.246.69%UTENUS Treasury 10 Year Note ETF$42.840.72%XLESPDR Select Sector Fund - Energy Select Sector$89.98-1.46%XLPSPDR Select Sector Fund - Consumer Staples$79.592.17%XLUSPDR Select Sector Fund - Utilities$76.76-3.43%Market News and Data brought to you by Benzinga APIs

DeepSeek sparks AI market chaos - is now the time to buy up cheap tech?

While DeepSeek has disrupted what's already happening in the space, it remains to be seen if it can lead. Ritwik Gupta, AI policy researcher at the University of California, Berkeley, said the firm proves "there is no moat when it comes to AI capabilities". He added: "The first person to train models has to expend lots of resources to get there, but the second mover can get there cheaper and more quickly." If you ask me, this sounds more like Amstrad's PC1512 than the iPhone. The IBM-compatible model undercut not only the price of other computers on the market, but was available more cheaply than software, which led to the strange scenario wherein a computer was cheaper than some spreadsheet options available. (For those wondering, I happened across an oddly relevant episode of "Micro Live" last night in my semi-regular exploration of the BBC archives. I highly recommend nosing through the "From the archives" section on iPlayer when you're after something a little different. I can also vouch for 1969's "How they dug the Victoria Line".) While this forced all players in the market to consider the costs of their products, from hardware to software, and sold well for Apprentice star Alan Sugar, it was not a great technological leap forward - and who owns an Amstrad product today? However, while Sugar famously bragged that he knew little of computers, Liang Wenfeng, the founder of DeepSeek, made his fortune with AI and algorithms, using them as the basis of his $8bn quantitative hedge fund to identify patterns in stock prices.

Japan's Chip Shares Sink as DeepSeek Triggers Competition Fear

Japan's chip-related shares including Advantest Corp. tumbled as Chinese AI startup DeepSeek gained traction, raising concern the app will threaten US's technological leadership. Nvidia Corp. tester supplier Advantest fell 8.2%, while Disco Corp. slid 2.9%. Tech and chip-related shares were vulnerable to profit taking Monday after surging last week on SoftBank Group Corp.'s plan to team up with companies including OpenAI and Oracle Corp. to invest in AI infrastructure in the US.

Chinese AI DeepSink a 'Wake-Up Call' for U.S. Tech Firms, Donald Trump Says, After Nvidia's World-Record $600 Billion Loss - IGN

Donald Trump has said the new Chinese artificial intelligence model DeepSink should be considered a "wake-up call" for the U.S. tech industry after Nvidia saw almost $600 billion wiped off its market value. The emergence of DeepSink sent stocks in companies heavily invested in artificial intelligence into freefall. Nvidia, which dominates the market for GPUs upon which AI models run, was hit hardest when its shares tumbled 16.86% -- the biggest loss in Wall Street history. Microsoft, Meta Platforms, and Google parent Alphabet fell between 2.1% and 4.2%, while AI server maker Dell Technologies was down 8.7%. DeepSeek claims its R1 model is a significantly cheaper alternative to western offerings such as ChatGPT. It's built on the open source DeepSeek-V3, which reportedly requires far less computing power than western models and is estimated to have been trained for just $6 million. While some have disputed this claim, DeepSeek has had the effect of calling into question the billions American tech companies are investing in AI, which in turn spooked investors. Indeed, DeepSeek shot to the top of the most downloaded free app chart in the U.S. off the back of rising discussion about its effectiveness. "[DeepSeek] performs as well as the leading models in Silicon Valley and in some cases, according to their claims, even better," Sheldon Fernandez, co-founder of DarwinAI, told CBC News. "But they did it with a fractional amount of the resources is really what is turning heads in our industry. "Instead of paying Open $20 a month or $200 a month for the latest advanced versions of these models, [people] can really get these types of features for free. And so it really upends a lot of the business model that a lot of these companies were relying on to justify their very high valuations." President Trump, however, tried to put a positive spin on recent events, suggesting DeepSink may be "a positive" for the U.S. "Instead of spending billions and billions you'll spend less and you'll come up with hopefully the same solution," he said, as reported by the BBC. "If you could do it cheaper, if you could do it [for] less [and] get to the same end result, I think that's a good thing for us," Trump added before insisting the U.S. will remain dominant in the field of AI. Nvidia, meanwhile, remains a $2.90 trillion company despite the impact of DeepSink. It's set to release the hotly anticipated RTX 5090 and RTX 5080 GPUs later this week, cards people are so desperate to buy they're braving the January cold and camping outside shops. Photo by NICOLAS TUCAT/AFP via Getty Images.

AI proxy stocks Siemens Energy, Munster tumble on DeepSeek concerns By Investing.com

Investing.com -- Shares of Siemens Energy AG (ETR:ENR1n) (XETRA:ENR) plummeted 17.2% as European markets faced a broad sell-off, particularly in the technology sector, following the introduction of a new low-cost artificial intelligence (AI) model by startup DeepSeek. Munster and Schneider Electric (EPA:SCHN) shares fell by 12% and 7%, respectively. Similarly, major European chip stocks, like ASML (AS:ASML), also witnessed sharp losses. The new AI model, which requires lower-cost chips and less data, has raised concerns over the future profitability of competitors and the necessity for expensive technology investments. The drop in Siemens (ETR:SIEGn) Energy's stock price reflects broader market anxieties, as the company is a significant provider of electric hardware for AI infrastructure. The introduction of DeepSeek's AI model challenges the prevailing assumption that AI will consistently drive demand across the supply chain, from chipmakers to data centers. This has led to a reassessment of the capital expenditure enthusiasm that had been bolstered by recent major commitments from companies like Stargate and Meta (NASDAQ:META). The pan-European STOXX 600 index fell 0.7%, while U.S. Nasdaq Composite futures and S&P 500 futures saw declines of 3.1% and 1%, respectively. European tech stocks, including chip equipment makers like ASML, were notably affected, with the sector dropping 4.5% overall. Jefferies analyst Graham Hunt commented on the situation, stating, "DeepSeek's power implications for AI training punctures some of the capex euphoria which followed major commitments from Stargate and Meta last week." This sentiment captures the shift in investor sentiment as the market adjusts to the potential impact of the new AI model on the industry's growth and capital investment projections.

Tech's DeepSeek Slump Left Rest of Market Historically Unscathed

Several measures of stock market health suggest that Monday's sudden slump was in fact mostly an isolated hit to the world's biggest technology firms and AI-related shares. The Nasdaq 100 slid 3% and Nvidia Corp. plunged 17% -- shedding almost $600 billion in market value in the biggest wipe-out in history. That came as Chinese startup DeepSeek's latest model shook the belief that only Big Tech with huge budgets can compete in the artificial intelligence field -- questioning the investment case that has favored the biggest players with rich valuations.