US stock index futures experienced a downturn during early Asian trading on Monday, as apprehensions grew regarding China’s DeepSeek AI model potentially disrupting the tech market. For more details, visit the full article here. As of 10:12 a.m. in Hong Kong, S&P 500 futures had fallen by 1%, while Nasdaq 100 contracts saw a sharper decline of 1.9%. These losses extended from Friday’s session when US equities dipped following President Donald Trump’s inauguration.
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Meanwhile, the Hong Kong stock market showed resilience with the Hang Seng Tech Index rising by up to 2% ahead of the upcoming Lunar New Year holidays. In contrast, Tokyo’s Advantest Corp., a significant supplier to Nvidia, suffered a steep fall of up to 8.6%. Market closures in Taiwan and South Korea provided a temporary respite.
DeepSeek’s new AI model, unveiled last week, has stirred discussions due to its cost-effective nature and ability to operate on reduced-capability chips. This development challenges the dominance of US tech giants, including Nvidia Corp. Nirgunan Tiruchelvam from Aletheia Capital noted that DeepSeek’s model questions the substantial investments Silicon Valley has made in the AI sector.
The shift in US futures marks the beginning of a significant week for technology earnings, with Microsoft Corp. and Apple Inc. poised to announce their results. Profit growth in these companies is expected to have decelerated, causing concerns about the inflated valuations driven by AI excitement.
According to data from the IndexBox platform, the AI industry is projected to have a compound growth rate exceeding 30% in the forthcoming years, indicating the increased potential for competition. Although the US has been a leader in AI technology, DeepSeek’s entry into the market showcases China’s rapid advancement. Charu Chanana of Saxo Markets emphasized that while US companies remain dominant, rising competition suggests that this leadership could face challenges more rapidly than anticipated.
As the tech industry braces for an important earnings period, the emergence of competitors like DeepSeek highlights the necessity for established firms to continually innovate and adapt within this dynamic sector.