DeepSeek's low-cost model rattles Australian AI shares

Goodman

28/01/2025 24:49

By Aaditya GovindRao
       Jan 28 (Reuters) - Australian stocks that are exposed to the artificial intelligence
wave fell sharply on Tuesday as investors feared the emergence of a low-cost AI model from
Chinese startup DeepSeek would threaten the dominance of current market leaders.
    Shares of AI software firm Appen  APX.AX  fell 3.3%, while AI chipmaker Brainchip  BRN.AX 
lost 10.3% by 0029 GMT. The technology sub-index  .AXIJ  was down 1%.
    Last week, DeepSeek launched a free AI assistant that it says uses less data at a fraction
of the cost of incumbent services. By Monday, the assistant had surpassed U.S. rival ChatGPT in
downloads from Apple's  AAPL.O  app store.
    The new model's sudden rise sent global technology stocks crashing overnight, with leader
Nvidia  NVDA.O  losing $592.7 billion in market capitalization, the biggest one-day loss for a
Wall Street stock, according to data compiled by LSEG.
    In Australia, data centre landlords Goodman Group  GMG.AX , NEXTDC  NXT.AX  and DigiCo
Infrastructure REIT  DGT.AX  tumbled 6.4%, 6.2% and 11.1%, respectively, as DeepSeek's model
sparked concerns of lowered spending on infrastructure.
    Australia's data-centre market saw outsized investment last year as the AI boom drove a
frenzied demand, with giants such as Nvidia pouring billions to build capacity.
    "In our view, DeepSeek most likely drives further demand for data centers globally with
advanced computational capabilities, high capacity storage, robust networking, energy efficient
designs and infrastructure," analysts at Citi said in a note.
    Jessica Amir, a market strategist at trading platform Moomoo, said she expects Australians
to reassess their exposure to AI and technology after the DeepSeek-induced selloff, and rotate
to safe havens such as healthcare and staples.


    

 (Reporting by Aaditya Govind Rao in Bengaluru; Editing by Alan Barona)
 ((Aaditya.GovindRao@thomsonreuters.com))