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A new AI model from Chinese startup DeepSeek has sent shockwaves through the European chipmaking and data center sectors, with investors jittery about its potential to disrupt the AI landscape and impact demand for hardware.
Shares in European chipmaking and data center -exposed stocks experienced a significant decline on Monday as investors expressed concerns regarding the implications of DeepSeek, a Chinese firm, releasing a new artificial intelligence (AI) model. The startup launched a free AI assistant designed to rival OpenAI's ChatGPT, claiming its technology delivers comparable performance despite utilizing cheaper chips and less data.
On Monday, DeepSeek's large language model secured the top ranking among free applications on Apple's App Store. While some skepticism surrounds DeepSeek's assertions, the model's emergence has ignited market anxieties about a long-held belief that AI would drive a surge in demand across the tech sector, from semiconductors to data centers. The release and subsequent testing of DeepSeek's flagship model also prompted questions about the substantial capital expenditure undertaken by US tech giants in recent years to build their AI infrastructure – and the anticipated returns investors expect from these heavy investments.Analysts at James expressed their astonishment in a note to clients, stating, 'DeepSeek clearly doesn’t have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive.' They further queried, 'The natural question is, how would DeepSeek’s emergence impact compute intensity growth and the demand for hardware/semiconductors?' Apple (NASDAQ:AAPL), a company propelled by AI enthusiasm to become one of the world's most valuable corporations, saw its stock value plummet by over 8%, with a significant decline observed in premarket US trading.
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