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Investing.com -- Shares of Siemens Energy AG (ETR:ENR1n) (XETRA:ENR) plummeted 17.2% as European markets faced a broad sell-off, particularly in the technology sector, following the introduction of a new low-cost artificial intelligence (AI) model by startup DeepSeek.
Munster and Schneider Electric (EPA:SCHN) shares fell by 12% and 7%, respectively. Similarly, major European chip stocks, like ASML (AS:ASML), also witnessed sharp losses.
The new AI model, which requires lower-cost chips and less data, has raised concerns over the future profitability of competitors and the necessity for expensive technology investments. The drop in Siemens (ETR:SIEGn) Energy's stock price reflects broader market anxieties, as the company is a significant provider of electric hardware for AI infrastructure.
The introduction of DeepSeek's AI model challenges the prevailing assumption that AI will consistently drive demand across the supply chain, from chipmakers to data centers. This has led to a reassessment of the capital expenditure enthusiasm that had been bolstered by recent major commitments from companies like Stargate and Meta (NASDAQ:META).
The pan-European STOXX 600 index fell 0.7%, while U.S. Nasdaq Composite futures and S&P 500 futures saw declines of 3.1% and 1%, respectively. European tech stocks, including chip equipment makers like ASML, were notably affected, with the sector dropping 4.5% overall.
Jefferies analyst Graham Hunt commented on the situation, stating, "DeepSeek’s power implications for AI training punctures some of the capex euphoria which followed major commitments from Stargate and Meta last week."
This sentiment captures the shift in investor sentiment as the market adjusts to the potential impact of the new AI model on the industry's growth and capital investment projections.
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