The announcement of China’s DeepSeek chatbot caused a sell-off in US tech companies, which caused Japanese tech businesses to plummet Tuesday. Meanwhile, the dollar gained strength when a report suggested that Washington was considering imposing global tariffs on a variety of items.
As investors followed a rout on Wall Street that saw Nvidia collapse 17%, wiping away more than half a trillion dollars from its market capitalization, Tokyo-listed companies associated with the artificial intelligence sector plummeted for a second day in a row.
The retreat followed DeepSeek’s release of its R1 chatbot, which reportedly demonstrated the ability to match the capabilities of US AI leaders at a fraction of the money spent by US businesses.
Nvidia has been the standout company that has led the drive by investors to seek out all things AI, spending vast sums of cash but seeing their share prices rocket — the US chip firm has piled on about 1,900 percent in five years.
The revelation of DeepSeek also followed President Donald Trump’s promise of a new $500 billion project to develop artificial intelligence infrastructure in the US.
The announcement by Trump “should be a wake-up call for our industries that we need to be laser-focused on competing to win” .
It might be a “positive” for US tech firms, he contended.
“Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution,” he said.
The Nasdaq tanked more than three percent and the S&P 500 more than one percent, with another US chip-maker, Broadcom, off 17.4 percent.
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