(Bloomberg) — US stock index futures tumbled in Asian trading hours Monday amid concerns that an artificial intelligence model from China’s DeepSeek may disrupt the technology world.
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Buzz grew over the weekend about DeepSeek’s latest product being cost-effective while running on reduced-capability chips, potentially raising questions over the dominance of US tech firms including Nvidia Corp. The Chinese firm’s AI model is now at the top Apple Inc.’s App Store rankings.
S&P 500 futures fell as much as 1% as of 10:12 a.m. in Hong Kong, while contracts on the Nasdaq 100 dropped as much as 1.9%. The moves represent continued losses from Friday’s cash session, as US shares cooled off after gains earlier in the week as President Donald Trump took office.
Stocks in Hong Kong climbed Monday, with the Hang Seng Tech Index climbing as much as 2% ahead of Lunar New Year holidays this week. In Tokyo, shares of Advantest Corp., a key Nvidia supplier, slid as much as 8.6%. Markets were closed in Taiwan and South Korea.
The DeepSeek product “is deeply problematic for the thesis that the significant capital expenditure and operating expenses that Silicon Valley has incurred is the most appropriate way to approach the AI trend,’ said Nirgunan Tiruchelvam, head of consumer and internet at Singapore-based Aletheia Capital. “It calls into question the massive resources that have been dedicated to AI.”
The declines in US futures come at the start of a big week for earnings from major tech companies including Apple and Microsoft Corp. Profit growth is expected to have slowed while valuations remain inflated, once again causing concern over the large AI-driven rally in the sector.
The DeepSeek release raises new doubts, challenging the notiong that China’s AI technology is years behind US counterparts. Washington’s trade restrictions had kept the most cutting-edge chips out of China’s hands, but DeepSeek’s model was built using open source technology that is easy to access.
Read: Nasdaq Futures Sink as DeepSeek Sparks US Tech Concern: Analysts
“While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted,” said Charu Chanana, chief investment strategist at Saxo Markets. “The emergence of China’s DeepSeek indicates that competition is intensifying, and although it may not pose a significant threat now, future competitors will evolve faster and challenge the established companies more quickly. Earnings this week will be a huge test.”