Nine of WA’s information technology stocks ended their day in the red, with Pointerra leading the pack on an 11 per cent drop.
It’s the name on everyone’s lips this week: DeepSeek AI set tongues wagging after the Chinese company released its new open-source artificial intelligence model and topped the App Store charts.
The privately owned business triggered panic on Wall Street come Monday as tech stocks’ worst fears became a reality: a space race is well and truly on in the AI sector.
Analysts and investors raced to the phones, while U.S. President Donald Trump called the app’s emergence a “wake up call” for the industry.
For some, that wakeup was truly a nightmare.
U.S. chipmaker Nvidia experienced the biggest drop in the nation’s stock market history, shedding roughly 17 per cent of its valuation in just six short hours.
Other members of the Magnificent Seven – a collective of high-growth, high performing US stocks – didn’t fare much better. Alphabet, Amazon, Apple, Meta, Microsoft and Tesla shares all fell in Monday’s session
Big-picture, U.S. tech stocks (as measured by the Nasdaq Composite) lost three per cent of their value in Monday’s rout. And when the ASX woke up, things weren’t much better.
Nine of WA’s information technology stocks ended their day in the red, with Pointerra leading the pack on an 11 per cent drop.
WA tech stocks landed in the red, reflecting Wall Street's DeepSeek fears
It wasn’t just the tech stocks which were hit hard. Aussie uranium plays like Basin Energy, Deep Yellow and Paladin Energy were all feeling the pinch come midday as DeepSeek fears hit the Aussie equities market.
The rout likely comes down to DeepSeek’s supposed energy and cost efficiency. The company claims it can train version three of its large language model for just US$5.5 million – that’s roughly one twentieth of what OpenAI spent to level up ChatGPT 4.
An overwhelming amount of that expense can be traced to a technology stock’s power bill. But if AI makers can train their tech at just a fraction of the energy cost, it spells bad news for the producers of the future, and the miners behind the resources that will fuel them.
Regardless of DeepSeek’s long-term impact, the market must now face its fears of sustainability and longevity. If it doesn’t, we could be in for a very bumpy ride as the AI space race truly takes off.
