Stock markets fell sharply on Monday, dragged down by fears that advances in intelligence made by Chinese upstarts could threaten the power of America’s tech capital.
Chinese Ai company Deepseek has made waves by comparing the cutting edge capabilities of chatbots while using some of the specialized computer chips that leading AI companies rely on. That has led investors to recoup large sums of money in anticipation of Nvidia’s multimillion-dollar headcount, as well as investments in companies like it that are building their own AI businesses.
Premarket trading is exposed trading that markets are falling at the open, with S&P 500 futures hitting more than 2 percent and the tech-threat nasdaq down more than 4 percent.
The pain is concentrated in the companies that predate the AI Boom, including the multitrillion-dollar group that has been pulling in the biggest annual gains behind US markets since the 1990s.
Nvidia was down more than 10 percent in premarket trading, a move that wiped hundreds of billions of dollars off its market value. Other chipmakers such as equipment specialist AMD and semiconductor specialist ASML recorded similar declines.
“Even if Deentiseek does not maintain its current popularity, this development serves as a reminder that the competition in the Global Ai Arena is intensifying, and Nvidia may not be in pole position for investment forever,” he wrote in a research note.
Shares of Meta, which last week announced a big jump in its spending plans for data centers, warehouses for old computers that house artificial intelligence, fell 3 percent. Microsoft, also a big bet on AI, fell more than 5 percent. Oracle, a partner in OpenAI and StoryBank unveiled at an event with President Trump last week, fell more than 7 percent.
(The New York Times has sued Opelai and its partner, Microsoft, claiming copyright infringement for news content related to AI systems. The two tech companies have denied the suit’s claims).
The turmoil is also hitting shares of services companies that have opened new lines of business that serve the sharp energy needs of data centers. Constellation Energy fell more than 10 percent in premarket trading.
Mr Trump promised to speed up AImerican-Make production on Thursday, signing an executive order aimed at “removing barriers” to the creation of artificial intelligence. As the US government works to maintain the country’s lead in the AI race, it is trying to limit the number of powerful chips, such as those made by Nvidia, that can be sold to China and other competitors.
While acknowledging the power of deepseeity systems, analysts at Bernstein noted that “the initial reaction does not involve panic.” Any computing capacity freed up by an efficient AI system will be dragged down by rapidly growing demand, they say: “We’re still going to need, and get, more chips.”
Source link
