Recent events in the technology sector have shown a disruption in market expectations as Chinese artificial intelligence startup DeepSeek has attracted attention with its latest AI model. This model, characterized by high efficiency even on less advanced chips, has raised concerns about a possible threat to the position of leaders such as Nvidia, who have so far dominated the AI sector thanks to their high-performance chips.

Market reaction

As part of the capital market's response to these news, the reaction was immediate and significant. The Nasdaq 100 fell more than 3.0%,[1] while the S&P 500 fell more than 2%.[2] In Europe, the negative effects were mainly felt on the shares of chip companies, where, for example, the shares of ASML Holding NV fell by more than 10%[3] *. In addition, this development also reflects significant investor concern about the future of traditional giants in AI technology.

Strategic impact

Analysts at Union Bancaire Privee, including Vey-Sern Ling, pointed out that the savings that DeepSeek brings in terms of the cost of AI models can fundamentally change the dynamics of investment across the AI sector. The traditionally high cost of computing resources that were required to develop and run AI models could now be significantly reduced, allowing for greater competitiveness and availability of AI solutions.

Long-term perspectives

The launch of the new DeepSeek product opens up a discussion about the capabilities and pace of development of AI technologies in China, which until now have been perceived as lagging behind American standards. However, by leveraging open technology and less reliance on high-end chips, DeepSeek proves that it can compete effectively anyway. This development also raises potential questions about whether the current valuations of leading U.S. technology companies are justified. Specifically, the Nasdaq 100 is currently trading at 27 times its estimated future earnings compared to its three-year average, 24 times.

Conclusion

Traders should increase their attention to the performance of major technology companies, especially those that have a large share of the AI technology market, in the coming days. The evolution of DeepSeek and its impact on traditional players such as Nvidia should also be closely monitored, and it will be crucial to see how these companies respond to new challenges and adapt their strategies to rapidly changing market conditions. This week will undoubtedly bring a significant test for the sector, not only in terms of technological innovation, but also in terms of its ability to adapt to new competitive conditions.

* Past performance is not a guarantee of future results.

[1] Nasdaq 100 price performance over the past five years: https://tradingeconomics.com/us100:ind

[2] S&P 500 price performance over the past five years: https://tradingeconomics.com/spx:ind

[3] ASML Holding NV's share price performance over the past five years: https://tradingeconomics.com/asml:na