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Chinese artificial intelligence startup DeepSeek rocked global technology stocks yesterday, 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 rich valuations for companies like Nvidia Corp, which has led the global AI stock boom as its chips have been seen as essential to the technology. Shares of the Santa Clara, California-based firm slid 10 percent in premarket trading yesterday.
Nasdaq 100 futures tumbled 3,4 percent, while contracts on the S&P 500 fell 2 percent in New York.
In Europe, tech stocks led market losses, with shares of chip equipment maker ASML Holding NV down 11 percent.
The Cboe Volatility Index, known as the VIX, spiked higher. The Nasdaq 100 and Europe’s Stoxx 600 technology sub-index were together set for a market capitalisation wipeout of roughly $1 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.”
Roughly 200 000 Nasdaq 100 futures contracts changed hands, about four 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. — Bloomberg.
Online Reporter