Friday, February 14, 2025
HomeBusinessThe AI World Is Upended By DeepSeek, Which Causes Nvidia And Tech...

The AI World Is Upended By DeepSeek, Which Causes Nvidia And Tech Stocks To Plummet.

Following a steep sell-off on Wall Street on Tuesday, Japanese tech companies plummeted as China’s DeepSeek chatbot upended the artificial intelligence industry, casting doubt on US tech titans’ large expenditures.

Reports that Washington was considering imposing global tariffs on a variety of items caused the dollar to rise, reigniting concerns of a trade war.

Artificial intelligence-related businesses in Tokyo saw a second straight day of declines, following a Wall Street crash in which Nvidia’s stock sank 17%, wiping out more than half a trillion dollars from its market valuation.

The unveiling of DeepSeek’s R1 chatbot, which supposedly challenges the skills of US AI leaders at a fraction of their investment expenditures, set off the sell-off.

Due to significant expenditures in the field, Nvidia, a leading player in AI, has seen its stock skyrocket by almost 1,900% in the last five years.

However, questions concerning the viability of such business models have been highlighted by DeepSeek’s announcement.

Additionally, the report came after US President Donald Trump announced a $500 billion plan to strengthen AI infrastructure in the US.

Trump called the incident a “wake-up call” for American tech companies.
“You’ll spend less and hopefully get the same results instead of spending billions and billions,” he added. Nonetheless, DeepSeek’s chatbot was deemed “impressive” by OpenAI CEO Sam Altman.

The S&P 500 fell more than 1%, and the Nasdaq fell more than 3%. Another US chipmaker, Broadcom, saw a 17.4% decline.

The Nikkei fell 1.4% on Tuesday as the sell-off continued into Tokyo. AI-related equities took a particularly severe beating, with Disco Corporation down about 3%, Tokyo Electron down 5.7%, and Advantest down more than 11%. Following an 8% drop the day before, SoftBank, a significant backer of Trump’s AI project, saw a more than 5% loss.

ALSO READ:  The Price Of Gasoline Has Been Raised By NNPCL To N990 In Abuja And N965 In Lagos.

The Greenback Rally

According to Rodrigo Catril of National Australia Bank, “the DeepSeek news has prompted a rethink of the AI revolution and one of the pillars of current US exceptionalism.”

“The demand for advanced chips, data center infrastructure, and energy may not be as significant as first anticipated if R1 fulfills its initial promise.”

Ahead of the Lunar New Year vacation, Asian markets saw little activity and inconsistent results. Sydney, Wellington, Manila, and Bangkok saw minor declines, while Hong Kong, Singapore, and Mumbai reported gains. Taipei, Seoul, Jakarta, and Shanghai were all shut down.

After the Financial Times reported that US Treasury Secretary Scott Bessent was considering universal tariffs that would start at 2.5% and increase gradually each month, possibly reaching 20%, the dollar strengthened.

The report came after Trump threatened a 25% tariff in a diplomatic dispute with Colombia over deportation policies. Despite Bogota’s concession, analysts pointed out that the incident demonstrated Trump’s willingness to use tariffs as a weapon.

The South African rand and the Mexican peso both fell more than 1%, while the dollar gained ground against the yen, euro, and sterling.

In view of Trump’s tariff policies and larger economic goals, investors are now anticipating the Federal Reserve’s policy meeting in the hopes of gaining clarity on its interest rate outlook.

According to Neil Wilson, an analyst at TipRanks, “data points to improving inflation and continued growth, but Trump’s executive orders on immigration could tighten the labor market and push up wages.”

“This is only the beginning in terms of tariffs. Wilson continued, “Trump may say that he would ‘rather not’ impose new tariffs on China, but the trajectory suggests otherwise.” “The reality of tariffs has not yet been fully priced into the market.”

ALSO READ:  In A Move Pushed by AI, An Italian Bank Is Cutting 9,000 Jobs

Key players in the area

Tokyo: Nikkei 225: closed at 39,016.87, down 1.4%.

Hong Kong’s Hang Seng Index closed at 20,225.11, up 0.1 percent.

Shanghai Composite: Holiday closure.

Euro/dollar: down from Monday’s $1.0492 to $1.0437.

Dollar/pound: down from $1.2496 to $1.2440.

Dollar/yen: UP at 155.71 yen from 154.61 yen.

Euro/pound: DOWN at 83.85 pence from 83.94 pence.

ALSO READ:

Obasa: Don’t Touch Banana Peels, Says Former Lagos Speaker Mamora To Meranda.

RELATED ARTICLES

Leave a Reply

- Advertisment -

Most Popular

Recent Comments