NVIDIA, ASML dive as Deepseek triggers tech stock selloff

(Bloomberg) — Nvidia Corp . and ASML Holding NV Shares sank early Monday as Chinese artificial intelligence startup Deepseek appeared to deliver comparable performance to Western chatbots at a fraction of the price.

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NVIDIA shares fell about 9% in early trading, while ASML shares fell as much as 11% to €626.20 a share in Amsterdam trading, the biggest intraday drop since Oct. 15. Technology-heavy NASDAQ 100 index futures also fell.

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Deepseek’s latest AI model, released last week, is widely seen as competing with those of Openai and Meta Platforms Inc. The open source product was founded by Quant Fund Chief Liang Wenfeng and is now headed by Apple Inc. Ranking of app stores.

“Concerns have immediately emerged that it could be disruptive to the current AI business model, which relies on high-end chips and vast computing power and thus energy,” Jefferies analysts said in a note to clients.

NVIDIA designs the semiconductors used in AI, and ASML makes the machines needed to produce high-end chips. Both companies have benefited from an increase in AI spending. Meta announced plans on Friday to increase capital spending on AI projects this year by about half to $65 billion. This came on the heels of Openai, Softbank Group Corp. and Oracle Corp announcing a $100 billion joint venture called Stargate to build data centers and AI infrastructure projects around the US.

In an effort to stall China’s progress in AI, the US has banned the export of advanced semiconductor technologies to the Asian country and is restricting sales of advanced Nvidia AI chips to many countries, including allies. ASML has never been able to sell its most advanced extreme ultraviolet lithography machines to China due to export restrictions led by the U.S. Last year, the Dutch government also restricted the immersion of deep ultraviolet lithography systems in China after pressure from the Biden administration.

But Deepseek’s progress suggests that Chinese AI engineers have found a way to work around export bans by focusing on greater efficiency with limited resources.

(Updates with details throughout)

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