AI-Exposed Australian Stocks Tank Amid DeepSeek Threat
Australian stocks with significant AI exposure plummeted on Tuesday amid investor concerns over the potential disruption posed by Chinese startup DeepSeek's cost-effective AI model.
Appen, an AI software provider, witnessed a 3.3% decline, while AI chipmaker Brainchip tumbled by 10.3%. The technology sub-index also dipped by 1%.
Last week, DeepSeek launched a free AI assistant that leverages less data at a fraction of the cost of existing services. This model has quickly surpassed ChatGPT in downloads from Apple's app store.
The emergence of DeepSeek has triggered a global tech stock selloff. Nvidia, the industry leader, lost $592.7 billion in market capitalization overnight, marking the largest one-day loss for a Wall Street stock.
In Australia, data center landlords witnessed significant losses due to concerns over reduced infrastructure spending. Goodman Group, NEXTDC, and DigiCo Infrastructure REIT declined by 6.4%, 6.2%, and 11.1%, respectively.
Analysts at Citi anticipate increased demand for data centers with advanced capabilities as DeepSeek's model drives further computational and storage requirements.
Jessica Amir of Moomoo predicts that Australian investors will re-evaluate their exposure to AI and technology in the wake of the DeepSeek-induced sell-off, seeking safe havens in sectors like healthcare and consumer staples.