Tech shares in Asia and Europe have taken a hit as the emergence of a Chinese chatbot competitor to OpenAI’s ChatGPT, DeepSeek, raised doubts about the sustainability of the US artificial intelligence boom.
Shares in companies listed in Asia and Europe fell on Monday morning and the tech-heavy Nasdaq index in New York was poised to open lower after investors digested the implications of AI models developed by the startup DeepSeek. The DeepSeek AI assistant topped the Apple app store in the US and UK over the weekend, above OpenAI’s ChatGPT.
DeepSeek claims to have used fewer chips than its rivals to develop its models, making them cheaper to produce and raising questions over a multibillion-dollar AI spending spree by US companies that has boosted markets in recent years.
Marc Andreessen, a leading US venture capitalist, compared the launch of DeepSeek’s R1 model to a pivotal moment in the US-USSR space race, posting on X last week that it was AI’s “Sputnik moment”.
According to DeepSeek, its R1 model outperforms OpenAI’s o1 mini model across “various benchmarks”, while research by Artificial Analysis puts it above models developed by Google, Meta and Anthropic in terms of overall quality.
The pan-European Stoxx 600 lost 0.75% in early trading, and technology stocks were down by 4.5%. The Dutch chipmaker ASML slid by 8.2%, while Germany’s Siemens Energy, which provides hardware for AI infrastructure, lost 4.1% and France’s digital automation company Schneider Electric fell by 6.8%.
Frankfurt-listed shares in Nvidia, the US chipmaker at the forefront of developments in AI, slipped about 7%, while those of Tesla, Amazon and Meta fell by more than 2% in early European trading.
It followed losses in Asia, where the Japanese chip companies Disco and Advantest – a supplier to Nvidia – suffered declines of 1.8% and 8.6% respectively. In the US, Nasdaq 100 futures were down 2.6% and S&P 500 futures slipped 1.4%.
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Richard Hunter, the head of markets at the platform Interactive Investor, said: “It will almost certainly put the cat among the pigeons as investors scramble to assess the potential damage it could have on a burgeoning industry which has powered much of the gain seen in the main indices over the last couple of years.
“The larger question has suddenly become whether the hundreds of billions of dollar investment in AI needs re-evaluation.”