Tech stocks fall sharply over DeepSeek concerns, with NVDA down 17%+, TSM down 14%+, AMD down 6%+, ASML down 6%+, and MSFT down 3%+

Start-up's model raises questions about need for huge western hardware investment — Tech stocks tumbled on Monday as advances by Chinese artificial intelligence start …

Financial Times 2025-01-27

Context & Ripple Effects

This is another sharp repricing of the AI trade after an earlier Nvidia pullback tied to doubts about returns on AI spending and a broader July selloff that also hit ASML and TSMC. The distinction here is that the catalyst is a perceived challenge to the scale of hardware investment assumed by the market.

The related coverage immediately after this move complicates the initial read: estimates that DeepSeek used substantial GPU resources suggest the debate is less simply about whether compute is needed than about where AI spending and value accrue.

First-order effects

Nvidia, TSMC, AMD and ASML face an immediate market reassessment of the hardware-demand expectations embedded in their valuations; Microsoft is also hit as a major AI investor.
DeepSeek’s reported progress puts the assumed relationship between model advances and ever-larger Western hardware budgets under direct investor scrutiny.

Second-order effects

AI infrastructure suppliers and their customers may face greater pressure to demonstrate that incremental compute spending produces economic returns, rather than relying on broad AI-demand expectations.
The next-day assessment that DeepSeek spent well over $500M on GPUs weakens a simple “less hardware” interpretation and shifts attention toward which AI builders and suppliers capture demand.

Third-order effects

If more capable models can be developed or deployed with different compute profiles, the AI supply chain may become less uniformly tied to one scaling path and more differentiated by workload, model strategy and customer economics.
The durable issue is compute execution risk: AI investment can remain large while its distribution across chip designers, foundries, equipment makers and platform companies changes materially.

The trend: AI is moving from a broad infrastructure-supercycle narrative toward closer scrutiny of how model efficiency translates into compute demand and supplier economics.

Discussion

@benedictevans Benedict Evans on threads
It might be a good idea for some people to ask shareholders in airlines or railways how the Jevons paradox played out.
@yannlecun Yann LeCun on threads
Major misunderstanding about AI infrastructure investments: Much of those billions are going into infrastructure for *inference*, not training. Running AI assistant services for billions of people requires a lot of compute. Once you put video understanding, reasoning, large-sca…
@tomgara Tom Gara on threads
On the one hand, rapid progress in open-source AI is seems pretty clearly good news for any company planning to use AI to make money. But on the other hand, Satya posting cope at 10pm Seattle time does raise concerns
@vthallam Venkatesh Thallam on threads
I mean DeepSeek R1 is good, but not so good that we crash our stock markets lol
@tradingthomas3 Tom on x
$AAPL's AI is so bad they don't even include it in the AI selloff. 💀
@matthewstoller Matt Stoller on x
So basically investors are fine with big tech and pummeling chip stocks, betting against the ‘shovel money cash out the door to Nvidia’ trade. $META +1.69% $GOOGL -2.46% $MSFT -3.50% $AMZN - 1.05% $AAPL +2.63% $NVDA -14.76% $ASML -6.32% $ARM -9.80% $AVGO - 15.26%
@deedydas Deedy on x
Nvidia is down 12.7% today, ~$430B in market cap because of DeepSeek, close to the $500B committed to the Stargate project that they're a tech partner for. [image]
@bigbullcap Kaushik on x
U.S. Semiconductors: Is DeepSeek doomsday for AI buildouts? We don't think so - Bernstein [image]
@stockmktnewz Evan on x
APPLE $AAPL IS THE ONLY GREEN MAGNIFICENT 7 NAME TO START THE DAY 🍏 NVIDIA $NVDA SHARES SINK 13% IN BIGGEST DROP SINCE 2020 [image]
@can @can on x
another way to think about is deepseek wiped out twice the Turkiye 🇹🇷 GDP
@garrytan Garry Tan on x
This seems like an overreaction Wall Street needs to read the Wikipedia page on Jevon's Paradox [image]
@tkl_adam Adam Kobeissi on x
DeepSeek has now erased $2 trillion worth of market cap in US stocks. The biggest market headwind comes when you least expect it. [image]
@prithvir12 @prithvir12 on x
deepseek has created a clear market bifurcation. silicon valley VCs point to jevon's paradox to justify their inflated data center bags. wall street titans point to emanuel's fantastic piece on the short case for nvidia. snp, nasdaq on a knife's edge. which way will you turn, [im…
@milesdeutscher Miles Deutscher on x
If DeepSeek is the knife that could (momentarily) burst the AI stock bubble, then this could actually be bullish for crypto, as liquidity rotates back. AI stocks sucked up a lot of speculative capital that previously would've flowed into BTC/crypto. [image]
@a_xenop @a_xenop on x
It would be funny if Deepseek spooks the markets completely, ultimately upending the Trump presidency.
@jnordvig Jens Nordvig on x
Just keep in mind: Micro and Macro are not the same. The DeepSeek shock has one set up implications at the micro level, for specific US companies (with less moat) But the implications at the macro level can be entirely different (less moat meaning more productivity...) The two
@tszzl Roon on x
over the last few days ive learned aitwit basically doesn't understand anything, it's honestly embarrassing, what the hell are we doing on here
@0xfoobar @0xfoobar on x
why is everybody freaking out about deepseek tonight? it came out 6 days ago not this weekend. you had a full week of trading to digest the news
@gurgavin @gurgavin on x
NVIDIA SHARES ARE CURRENTLY DOWN 11% IN RESPONSE TO DEEPSEEK FROM CHINA NVIDIA HAS LOST $400 BILLION DOLLARS IN MARKET VALUE AND IS ON TRACK FOR THE BIGGEST 1 DAY LOSS OF ANY COMPANY IN HISTORY $NVDA [image]
@loopifyyy @loopifyyy on x
okay whoever said “deepseek” isnt the reason for this dump is wrong even if it fundamentally doesn't make sense, the market is OBVIOUSLY reacting to it
@andreassteno Andreas Steno Larsen on x
So what exactly do we know about DeepSeek today that we didn't know while the market was still open on Friday? Seems like a stop/loss party today, rather than something overly fundamental
@devpatelx6 Dev Patel on x
@AravSrinivas Watch the Wall Street bleed a Trillion Dollars in mcap today 🩸 Till now only the tech people knew and understood how good is DeepSeek. Today everyone will ! Historically the US has only taken the Soviets seriously, they've always taken the Republic of China for gran…
@bickerinbrattle George Robertson on x
So far this drop is likely not going to stick but is forcing a review on risk. Fab 7 and Deepseek are trivial shiny thoughts to cover over how hollow how empty the market methods of valuation.
@dylan522p Dylan Patel on x
Deepseek V3 and R1 discourse boils down to this. Shifting the curve means you build more and scale more dummies [image]
@linreporting Lin Lin on x
Japan AI-adjacent stocks fall heavily in trade. These stocks all rose last week off the back of the Stargate project, so perhaps there is some profit-taking, but also, analysts say, they're impacted by DeepSeek challenging US AI dominance. Read more: https://www.cnbc.com/... [ima…
@thestalwart Joe Weisenthal on x
Pre-market $META -5.3% $GOOGL -5.1% $NVDA -13% $ASML -9.7% $MSFT -6.7%
@tszzl Roon on x
makes absolutely no sense buy everything
@schuldensuehner Holger Zschaepitz on x
#Nvidia plunges >10% in premarket trading as China's DeepSeek triggers global tech sell-off. DeepSeek launched a free, open-source large-language model in late December, claiming it was developed in just two months at a cost of under $6 million. https://www.cnbc.com/... [image]
@jjvincent James Vincent on x
more than anything, i think this DeepSeek incident shows how febrile, reactive, and fundamentally unpredictable the AI world is right now. companies, markets, and individuals are all flipping out over information that is not fundamentally new. it's a fizzy, dangerous time
@deitaone @deitaone on x
Premkt $NVDA: -8.06% $MSTR: -7.12% $COIN: -5.52% $AMD: -4.86% $META: -4.28% $MSFT: -3.46% $AMZN: -3.43% $TSLA: -3.30% $GOOGL: -3.22 $AAPL: -1.81%
@kimmonismus @kimmonismus on x
You dont necessarly need Tanks and missles to start a war. Sometimes its just an AI model that cost 5m to train. [image]
@thestalwart Joe Weisenthal on x
$INTC actually green this morning. And all y'all were laughing at them for missing the boat on AI.
@packym Packy McCormick on x
What would be happening in the market right now if DeepSeek were an American open source AI lab and everything else about it - models, training costs, algorithms - were the same?
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