On January 28, Australian stocks tied to the artificial intelligence sector plummeted amid concerns over the potential threat posed by a low-cost AI model presented by Chinese startup DeepSeek to current market leaders.
Appen, an AI software firm, saw a 3.3% decline in its shares, while Brainchip, an AI chipmaker, experienced a 10.3% drop by 0029 GMT, contributing to a 1% decrease in the technology sub-index.
DeepSeek recently introduced a cost-efficient AI assistant that claims to use minimal data compared to existing services, quickly surpassing the download numbers of U.S. competitor ChatGPT on Apple's app store.
The sudden success of DeepSeek's model triggered a global tech stock slump, with Nvidia suffering a $592.7 billion loss in market capitalization, marking the largest single-day drop for a Wall Street stock, as reported by LSEG data.
In Australia, data center landlords Goodman Group, NEXTDC, and DigiCo Infrastructure REIT recorded declines of 6.4%, 6.2%, and 11.1%, respectively, fueled by concerns of reduced infrastructure spending due to DeepSeek's innovative model.
The Australian data-center market experienced a surge in demand last year amidst the AI boom, prompting industry giants like Nvidia to expand their capacity.
Analysts at Citi emphasized, "In our view, DeepSeek is likely to drive global demand for data centers that feature advanced computational capabilities, high-capacity storage, robust networking, energy-efficient designs, and infrastructure."
Market strategist Jessica Amir from trading platform Moomoo anticipates a reevaluation of Australians' exposure to AI and technology post the DeepSeek-driven market downturn, foreseeing a shift towards safer investments such as healthcare and staple sectors.