Introducing DeepSeek’s new chatbot has brought global financial markets into turmoil.
In premarket trading, the Nasdaq 100 plunged by up to 3.2%, while S&P 500 futures declined by 1.9%.
Across Europe, technology stocks were the primary drivers of market losses, with ASML, a chip equipment manufacturer, dropping over 8%. The pan-European Stoxx 600 index fell by 0.7%, and London’s FTSE 100, which has less exposure to the tech sector, decreased by 0.2%.
William Beavington of Jefferies remarked, “What’s particularly remarkable to us is the cost-effectiveness and efficiency they have achieved with the chips being used.”
Microsoft CEO Downplays Concerns Over Chinese AI Chatbot
Microsoft CEO Satya Nadella has downplayed fears regarding the emergence of Chinese AI startup DeepSeek, which has triggered a sell-off in US technology stocks.
Nadella stated that as artificial intelligence becomes more efficient and accessible, its usage is expected to skyrocket. He referenced Jevons paradox, an economic theory suggesting that improvements in technological efficiency can lead to increased consumption of resources rather than a reduction.
DeepSeek has impressed users with its launch of a free assistant, which its developers claim operates using lower-cost chips and requires less data.
Despite Nadella’s reassurances, Microsoft shares declined by over 4% in premarket trading in New York. This drop comes amid concerns that valuations of US tech stocks may be inflated as investors race to capitalize on the booming AI sector.
Nvidia Falls Over 10% as DeepSeek Disrupts the Market
Nvidia, a leading name in artificial intelligence, saw its shares drop by more than 10% in premarket trading following the launch of DeepSeek’s AI Assistant.
Other semiconductor companies were also affected, with AMD shares decreasing by 4.5% and Micron Technology falling by 7.4%.
In addition, AI server manufacturers Dell Technologies and Super Micro Computer experienced declines of 7.8% and 9.6% respectively ahead of the New York market opening.
Richard Hunter, Head of Markets at Interactive Investor, stated, “It is far too early to describe DeepSeek as an existential threat to US-based AI solutions. However, it will almost certainly stir the pot as investors rush to evaluate the potential impact on an industry that has driven much of the growth seen in major indices over the past few years.”
