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US tech stocks fell sharply in premarket trading after Chinese startup DeepSeek raised alarms about AI competition and America’s leadership in the sector, triggering a global sell-off.
Shares of chip designer Nvidia, a big beneficiary of AI hype, fell 9.84% at 5:11 a.m. ET before the market opened, News.Az reports, citing American media.
Netherlands-based chip companies ASML and ASM International fell 10.59% and 14.94% respectively in European trade, while in Asia, Japanese chip-related stocks were broadly lower.
DeepSeek launched a free, open-source prototype in late December, claiming it was developed in just two months at a cost of under $6 million — a much smaller outlay than that required by peers. westerners. Last week, the company released a reasoning model that also reportedly outperformed OpenAI’s latest in multiple third-party tests.
The developments have raised questions about the amount of money big tech companies have invested in AI models and data centers.
“DeepSeek clearly doesn’t have access to as much compute as US hyperscalers and somehow managed to develop a model that looks very competitive,” Srini Pajjuri, semiconductor analyst at Raymond James, said in a note on Monday.
