New York: The tech-heavy Nasdaq fell early Monday, as traders on Wall Street and other global stock exchanges reacted to the emergence of a low-cost Chinese artificial intelligence project that appears to have bypassed American companies.
DeepSeek, developed by a startup company based in the eastern Chinese city of Hangzhou, has demonstrated the ability to match the ability of leading companies in the field of artificial intelligence such as Nvidia, whose shares fell more than 11 percent on Monday, giving up about $400 billion in 2018. Market value.
The technology-rich Nasdaq index led the major indices to decline, falling by 2.7 percent, with artificial intelligence companies Meta, Microsoft, and Alphabet, the parent company of Google, all declining.
DeepSeek said it spent only $5.6 million to develop its model, which is a small amount compared to the billions that giant American technology companies have pumped into the field of artificial intelligence.
“US technological dominance is being challenged by China,” said Kathleen Brooks, research director at XTB. “The focus now is on whether China can do it better, faster and more cost-effectively than the United States, and whether it can win the AI race.”
Meta and Microsoft are among the tech giants scheduled to report earnings later this week, offering an opportunity to comment on the rise of the Chinese company, which venture capitalist Marc Andreessen likened to the “Sputnik moment,” when the Soviet Union shocked Washington with its 1957 decision. Launching a satellite into orbit.
“AI Assistant DeepSeek is now the highest-rated free app on the Apple App Store in the US,” said a note from David Morrison, chief market analyst at the FCA.
“Investors have been forced to reconsider capital spending forecasts and valuations given the threat of downgrades in Chinese AI models. These issues appear to be as good, if not better, than US issues.”
Earlier, European and Asian stock markets mostly fell, as markets also absorbed the recent tariffs involving US President Donald Trump and Colombia.
SoftBank Banks
Just last week after his inauguration, Trump announced a $500 billion project to build AI infrastructure in the United States.
Technology and chip companies were among the biggest losers in Tokyo on Monday as the Nikkei closed in negative territory, with Advantest down more than eight percent and Tokyo Electron about five percent.
SoftBank’s stock, a major investor in Trump’s artificial intelligence project, fell more than eight percent.
Alongside technology gains, this week also sees interest rate decisions from the Federal Reserve and the European Central Bank, ahead of US inflation data.
Stocks enjoyed a healthy rally last week on hopes that the second Trump administration will take a less stringent approach to global trade. However, his threat on Sunday to impose 25% tariffs on Colombian goods – rising to 50% next week – and cancel visas for government officials set off alarm bells.
This step came after President Gustavo Petro banned deportation flights from the United States.
In response to Trump’s decision, Petro initially announced retaliatory tariffs of 25% on imports from the United States.
But Bogotá later backed down and agreed to accept the deported citizens, with Foreign Minister Luis Gilberto Murillo saying they had “overcome the impasse.”
Key numbers around 1450 GMT
New York – Dow Jones: fell 0.3 percent to 44,271.66 points
New York – S&P 500: down 1.7% to 6,000.18 points
New York – Nasdaq: fell 2.7 percent to 19,415.06 points
London – FTSE 100 index: down 0.1 percent to 8495.07
Paris – CAC 40: Decreased by 0.4 percent to 7899.44
Frankfurt – DAX: fell 0.7 percent to 21,237.11
Tokyo – Nikkei 225: down 0.9% to 39,565.80 (close)
Hong Kong – Hang Seng Index: up 0.7% to 20197.77 (close)
Shanghai – Composite: down 0.1% to 3,250.60 (close)
EUR/USD: rose to $1.0510 from $1.0497 on Friday
GBP/USD: rose to $1.2499 from $1.2484
USD/JPY: Decreased to 154.29 yen from 156.00 yen
EUR/Pound: rose to 84.09 pence from 84.08 pence
Brent North Sea crude: fell 0.2 percent to $78.30 a barrel
West Texas Intermediate crude: fell 0.4% to $74.40 per barrel
