European Tech Shares Plummet as China's AI Innovation Sparks Market Concerns
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European tech shares tumble as China's AI push spooks investors
European shares slid on Monday as the technology sector joined the retreat in other markets after China's upgraded low-cost, low-power artificial intelligence (AI) model sparked worries about the profits of rivals and the need for costly tech. The pan-European STOXX 600 was down 0.7% of 0815 GMT. U.S. Nasdaq Composite futures tumbled 3.1%, while S&P 500 futures sank 1%. Startup DeepSeek has rolled out a free assistant that 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. The news rattled European tech stocks as well, which slid 4.5%. Chip equipment maker ASML slid 8.7%. Siemens Energy, which provides electric hardware for AI infrastructure, sank 17.7%, while AI darling Schneider Electric dropped 8.1%. The week ahead is packed with key interest rate decisions by central banks around the globe, with the Federal Reserve and European Central Bank policy verdicts in particular focus. Fourth-quarter gross domestic product numbers for the euro zone and Germany, along with inflation data for major European economies, are also part of a data-loaded week. Among other stocks, Ryanair added 2.1% after the low-cost carrier posted a bigger-than-expected quarterly profit. British American Tobacco was up 4% after the Donald Trump administration withdrew plans to ban menthol cigarettes.
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European tech shares tumble as China's AI push spooks investors
(Reuters) - European shares slid on Monday as the technology sector joined the retreat in other markets after China's upgraded low-cost, low-power artificial intelligence (AI) model sparked worries about the profits of rivals and the need for costly tech. The pan-European STOXX 600 was down 0.7% of 0815 GMT. U.S. Nasdaq Composite futures tumbled 3.1%, while S&P 500 futures sank 1%. Startup DeepSeek has rolled out a free assistant that 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. The news rattled European tech stocks as well, which slid 4.5%. Chip equipment maker ASML slid 8.7%. Siemens Energy, which provides electric hardware for AI infrastructure, sank 17.7%, while AI darling Schneider Electric dropped 8.1%. The week ahead is packed with key interest rate decisions by central banks around the globe, with the Federal Reserve and European Central Bank policy verdicts in particular focus. Fourth-quarter gross domestic product numbers for the euro zone and Germany, along with inflation data for major European economies, are also part of a data-loaded week. Among other stocks, Ryanair added 2.1% after the low-cost carrier posted a bigger-than-expected quarterly profit. British American Tobacco was up 4% after the Donald Trump administration withdrew plans to ban menthol cigarettes. (Reporting by Nikhil Sharma; Editing by Savio D'Souza)
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European technology stocks tumble following the release of a low-cost AI model by Chinese startup DeepSeek, raising concerns about the profitability of established AI companies and the need for expensive technology infrastructure.
Chinese AI Innovation Shakes European Tech Market
In a surprising turn of events, European technology shares experienced a significant downturn on Monday, primarily triggered by China's recent advancements in artificial intelligence (AI) technology. The pan-European STOXX 600 index fell by 0.7% as of 0815 GMT, reflecting the broader market sentiment
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.DeepSeek's Low-Cost AI Model Disrupts Market Expectations
At the heart of this market turbulence is the introduction of a new AI assistant by Chinese startup DeepSeek. This innovative model claims to utilize lower-cost chips and less data, challenging the prevailing market assumption that AI development necessarily drives demand for high-end chipmakers and data centers
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.Impact on European Tech Giants
The ripple effect of this development was felt across the European tech sector, which saw a substantial decline of 4.5%. Notable casualties included:
- ASML, a leading chip equipment manufacturer, saw its shares plummet by 8.7%
- Siemens Energy, a provider of electric hardware for AI infrastructure, experienced a staggering 17.7% drop
- Schneider Electric, often considered an AI industry darling, suffered an 8.1% decrease
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Global Market Repercussions
The impact of this news extended beyond European borders, affecting U.S. markets as well. Nasdaq Composite futures tumbled by 3.1%, while S&P 500 futures sank by 1%, indicating a broader tech sector decline
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.Related Stories
Upcoming Economic Events
While the AI-related news dominated headlines, investors are also bracing for a week packed with crucial economic events:
- Central bank decisions: The Federal Reserve and European Central Bank are set to announce their interest rate policies
- Economic indicators: Fourth-quarter GDP figures for the eurozone and Germany are expected
- Inflation data: Major European economies will release their latest inflation statistics
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Other Market Movements
Amidst the tech sector turmoil, some companies saw positive movement:
- Ryanair: The low-cost carrier added 2.1% to its share value after reporting better-than-expected quarterly profits
- British American Tobacco: Shares rose by 4% following the withdrawal of plans by the Donald Trump administration to ban menthol cigarettes
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This market upheaval underscores the volatile nature of the tech sector, particularly in the rapidly evolving field of AI. As innovations continue to emerge from unexpected quarters, investors and industry leaders alike must remain vigilant to the changing landscape of artificial intelligence and its far-reaching economic implications.
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