Global tech stocks tank as China’s DeepSeek triggers AI race debate
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 US 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. 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.
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 February 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.
