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).
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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 build-out of power production to fuel the models, and less need for large-scale data centres.
“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.
It has even attracted praise from US rivals for the assistant’s performance, despite questions continuing to swirl over the 2023-founded company’s…
