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Investing.com - Shares in European chipmaking and data center-exposed stocks tumbled on Monday as investors fretted over the implications of the release of a new artificial intelligence model from Chinese firm DeepSeek.
The start-up has launched a free assistant to rival that of OpenAI's ChatGPT, with the group saying that its technology offers similar performance despite using cheaper chips and less data. On Monday, DeepSeek's large language model was the best-rated free application on Apple (NASDAQ:AAPL)'s App Store in the US.
Although some doubts have been cast over DeepSeek's claims, the model has still sparked market worries over a long-standing wager that AI will fuel a chain of demand stretching from semiconductors to data centers.
The release and subsequent testing of DeepSeek’s flagship model also raised questions around a surge in recent massive capital spending by US tech giants on building out their AI infrastructure -- and the potential returns investors want to see from such heavy investment.
"DeepSeek clearly doesn’t have access to as much compute as US hyperscalers and somehow managed to develop a model that appears highly competitive," analysts at Raymond (NSE:RYMD) James said in a note to clients. "The natural question is, how would DeepSeek’s emergence impact compute intensity growth and the demand for hardware/semiconductors?"
However, they flagged that there remains "very limited information" around DeepSeek's product.
In European trading, ASML (AS:ASML), the Dutch computer equipment maker whose clients include Intel (NASDAQ:INTC), Samsung (KS:005930), and Taiwan's TSMC, was under particular pressure. Meanwhile, peers ASM International (AS:ASMI) and BE Semiconductor Industries (AS:BESI) slumped by more than 8%, and Schneider Electric (EPA:SCHN), Munters Group (ST:MTRS), and Siemens Energy (ETR:ENR1n) also declined sharply.
Frankfurt-listed shares in Nvidia (NASDAQ:NVDA), which has been propelled by enthusiasm around AI in recent years to become one of the world's most valuable companies, retreated by over 8% as well. In premarket US trading, the stock decreased heavily.
Broader stock futures on Wall Street, including the tech-heavy Nasdaq contract, also pointed lower.