Catenaa, January 28, 2025 – Global tech stocks plummeted for a second consecutive day Tuesday as the unveiling of a cost-efficient Chinese AI model disrupted investor confidence in the sector. Nvidia shares fell 17% on Monday, erasing $593 billion in market value, a historic one-day loss1.
Chinese startup DeepSeek introduced a low-cost AI assistant that challenges high-priced competitors like ChatGPT. OpenAI CEO Sam Altman praised the model, calling it “impressive” while welcoming competition.
The fallout rippled across global markets, hitting Japanese tech firms hard. Chip-testing firm Advantest dropped 10%, while Tokyo Electron and SoftBank Group slid 5%. The U.S. wasn’t spared: Microsoft, Alphabet, and Broadcom all faced declines, dragging the Philadelphia Semiconductor Index down 9.2%, its worst drop since March 2020.
Analysts pointed to the inflated valuations of major AI firms and the concentrated risk in investor portfolios. “Monday’s selloff highlighted the lack of margin for error in tech valuations,” said David Bahnsen of The Bahnsen Group.
DeepSeek, backed by Chinese startup High-Flyer, gained global attention with claims of training its AI model on Nvidia’s H800 chips for under $6 million. The development signals a shift in AI competition between the U.S. and China.
Governments are taking note. Japan’s digital minister acknowledged the unexpected competitiveness of Chinese AI, while former U.S. President Donald Trump called it a “wake-up call” for the industry.
As AI reshapes the tech landscape, investor focus now turns to upcoming earnings reports and their implications for capital spending.
- reuters.com: https://www.reuters.com/technology/tech-stock-selloff-deepens-deepseek-triggers-ai-rethink-2025-01-28/[↩]
