Chinese AI startup DeepSeek's low-cost, high-performing AI model has sparked concerns about its potential to disrupt the global AI landscape and challenge the dominance of U.S. tech giants. Japan's chip-related stocks have fallen sharply as investors react to the threat posed by DeepSeek's rapid progress and the implications for the established order in the AI industry.
Japan 's chip-related stocks experienced a significant decline on Monday, fueled by concerns raised by Chinese AI startup DeepSeek about a potential challenge to America's dominance in the field of artificial intelligence. This downturn in the Japan ese market is seen as a rotation away from growth stocks towards value stocks, according to Andrew Jackson, head of equity strategy at ORTUS Advisors.
He noted that investors are reacting to DeepSeek's rapid progress and the implications it might have for the established order in the AI landscape.DeepSeek's achievements have sparked apprehension among investors about the substantial financial investments made by major tech companies in AI models and data centers. The startup's ability to develop a powerful reasoning model, r1, at a cost significantly lower than those incurred by industry giants like OpenAI, has raised questions about the sustainability of the current investment strategies. While it is uncertain whether DeepSeek will emerge as a long-term viable and affordable alternative, the immediate concern centers on the potential erosion of pricing power held by U.S. tech giants and the need for them to re-evaluate their massive AI expenditures.Veteran investor Jesper Koll echoed these sentiments, highlighting the speed and determination with which China is advancing in the chip sector. He expressed worry that Japan's own ambitions in this domain might be overshadowed by China's relentless pursuit of technological superiority. Koll pointed out that while Japanese chipmakers possess world-class capabilities, their capacity for large-scale production remains limited, raising concerns about their ability to keep pace with China's aggressive expansion. The potential impact of DeepSeek's developments on the global tech landscape has also sent ripples through the U.S. stock market, with Nasdaq futures indicating a possible downturn. Chamath Palihapitiya, Canadian-American venture capitalist and CEO of Social Capital, anticipates market volatility as investors reassess the valuations of major tech companies, known as the 'Magnificent 7.
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