
DeepSeek’s AI Model Shakes Global Markets and Challenges AI Giants
The global financial markets were rocked on Monday by news regarding the Chinese startup DeepSeek, which introduced an AI model that could potentially rival OpenAI, an American leader in the field. DeepSeek's innovation, which is reportedly capable of operating on low-power chips, has raised concerns about the high valuations of AI-related companies, particularly those in the semiconductor industry. This revelation has triggered a wave of volatility across stock markets, casting uncertainty on the sector's dominance by American companies.
As trading began in Europe, the DAX in Germany fell by 1.1%, while France's CAC 40 saw a decline of 0.8%. The UK's FTSE 100 dropped by 0.3%. In the U.S., before markets opened, the S&P 500 slid by 1.6%, and the Dow Jones industrial average lost 0.9%. In Asia, the situation was mixed; Hong Kong saw a slight increase of 0.7%, Shanghai dipped by 0.1%, and Japan’s Nikkei 225 fell by 0.9%. Many other Asian markets were closed due to public holidays.
The news about DeepSeek’s AI model, if true, could signal the beginning of a shift in the global AI landscape. This startup claims it has developed an advanced AI that not only competes with OpenAI but also operates more efficiently using low-power chips, potentially shaking the foundations of American AI supremacy. However, analysts, including Christopher Dembik from Pictet AM, have urged caution, noting that these claims have not yet been verified by independent, reliable sources. Despite the uncertainty, the mere possibility of such competition has caused ripples in the stock prices of major companies, particularly those involved in AI and semiconductors.
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For example, in Europe, stocks of key semiconductor players saw significant drops: ASML fell by 8.72%, ASM by 11.17%, and Infineon lost 4.31%. In Paris, French electrical equipment giants like Schneider Electric and Legrand, heavily involved in data centers, also experienced sharp declines, with Schneider falling by 7.52% and Legrand by 7.75%. Meanwhile, Siemens Energy saw a dramatic plunge of over 16% in Frankfurt.
This market turbulence comes just days before the quarterly earnings reports of several major tech companies, including Microsoft, Meta, and Tesla, as well as Apple, all scheduled for later this week. Additionally, investors are keeping a close eye on macroeconomic events, such as the upcoming meetings of the U.S. Federal Reserve, the Bank of Canada, and the European Central Bank regarding their monetary policies. Inflation data and GDP reports from the U.S., Germany, France, Italy, and the Eurozone are also expected to be released soon, which could further influence market movements.
In the energy sector, the price of oil remained under pressure, with WTI crude dropping by 0.47% to $74.31 a barrel and Brent crude decreasing by 0.36% to $78.22. The U.S. dollar, which had weakened last week following a more moderate stance from Donald Trump on China, rebounded by 0.44% against the euro on Monday, signaling a potential shift in investor sentiment.
Meanwhile, Ryanair reported a significant increase in its net profit for the third quarter, rising to 149 million euros from just 15 million a year earlier. However, the airline remains cautious about its future outlook. Conversely, chemical giant BASF reported disappointing results, with its annual earnings falling short of expectations due to restructuring costs and exceptional charges.
The global markets are in a state of flux, driven by technological breakthroughs and geopolitical factors, as investors brace for what could be a transformative week ahead.
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