Today's Edition
New York (AFP)
The tech-rich Nasdaq tumbled early on Monday as traders around Wall Street and other global bourses reacted to the emergence of a low-cost Chinese generative AI venture that has apparently overtaken US companies.
DeepSeek, which was developed by a start-up based in the eastern Chinese city of Hangzhou, has shown the ability to match the capacity of AI pace-setters such as Nvidia, which sank more than 11 percent Monday, giving up some $400 billion in market value.
The tech-rich Nasdaq led major indices lower, falling 2.7 percent, with AI players Meta, Microsoft and Google parent Alphabet all firmly lower.
DeepSeek said they spent only $5.6 million developing their model -- peanuts when compared with the billions US tech giants have poured into AI.
US "tech dominance is being challenged by China," said Kathleen Brooks, research director at XTB. "The focus is now on whether China can do it better, quicker and more cost effectively than the US, and if they could win the AI race."
Meta and Microsoft are among the tech giants scheduled to report earnings later this week, offering opportunity for comment on the emergence of the Chinese company.
"DeepSeek's AI assistant is now the top-rated free application on Apple's US App Store," said a note from David Morrison, senior market analyst at FCA.
"Investors have been forced to reconsider the outlook for capital expenditure and valuations given the threat of discount Chinese AI models. These appear to be as good, if not better, than US versions."
Earlier, European and Asian stock markets mostly slid as markets also digested the latest tariff back-and-forth involving US President Donald Trump and Colombia.
SoftBank sinks
Just last week following his inauguration, Trump announced a $500 billion venture to build infrastructure for AI in the United States.
Tech and chip firms were among the big losers in Tokyo on Monday as the Nikkei ended in negative territory, with Advantest down more than eight percent and Tokyo Electron off almost five percent.
SoftBank, which is a key investor in Trump's AI project, tumbled more than eight percent.
Besides tech earnings, this week also sees interest-rate decisions from the Federal Reserve and European Central Bank, ahead of American inflation data.
