Today's Edition
(Financial Times)
The artificial intelligence-powered rally in US stocks has further to run, say equity investors, although the “wake-up call” from Chinese start-up DeepSeek is likely to reorder the winners and losers from the rapidly evolving technology.
DeepSeek last week unveiled a cutting-edge reasoning model capable of competing with those designed in the US — but apparently for a fraction of the cost — sending shockwaves through equities markets and reigniting fears among some investors of a repeat of the dotcom crash at the start of this century.
By the end of Monday, chipmaker and stock market darling Nvidia had shed almost $600bn — the biggest one-day loss in US history. A ferocious US tech sell-off spread to energy stocks and utilities that had been expected to benefit from demand for power to fuel AI data centres.
But since then, the sell-off has run out of steam. US indices ended the week lower, with Nvidia close to its Monday lows. The S&P 500 and tech-heavy Nasdaq Composite lost 1 per cent and 1.6 per cent over the past five sessions.
“DeepSeek isn’t devastating for the overall market. The impact will be far more subtle,” said Alicia Levine, head of investment strategy and equities at BNY Wealth.
She expects healthcare stocks and other companies with access to massive amounts of data to reap the rewards as investors move into less richly priced areas of the market.
“If AI becomes cheaper and faster, it makes sense that those companies would see a boost in value,” Levine said. “The picks and shovels” companies in the energy and infrastructure sectors, which have been among the main beneficiaries of Big Tech’s huge capital expenditure on AI, may suffer most, she added.
