Japan’s Nikkei drops 1.4% while stock futures point to slightly higher open on Nasdaq; Trump says ‘we need to be laser-focused on competing to win’
Darren Nathan at Hargreaves Lansdown is cautiously optimistic about the outlook for western AI firms:
It’s going to take a while for the dust to settle here but it’s by no means the end of the party for AI infrastructure. Many of the recent big cheques set aside for investment in the space look to have been signed off after DeepSeek hit the scene. These include the Stargate proposal, the Bank of China’s 5-year AI investment plan and Meta’s capex plans of up to $65bn for 2025.
Steep reductions in development costs in the early years of technology shifts have been commonplace in economic history. A paradox first noted by the economist William Jevons in 1865 after observing a spike in coal consumption after the introduction of the more efficient Watt steam engine. A fall in cost can actually lead to a larger addressable market. So future demand for computing power could outstrip current expectations.
its head above water yesterday amidst a sea of red for tech stocks around the world. Defensive sectors had the best of it including non-cyclical consumer stocks such as Unilever and British American Tobacco, as well as the bigger pharmaceutical names. The same sectors were also in the green across the Atlantic, meaning those portfolios with broader exposure are likely to have smoothed out the market’s most recent gyrations.
Companies in the semiconductor industry have borne the brunt of the sell-off as the emergence of a new AI model from Chinese startup DeepSeek, reportedly developed on a shoestring budget of under $6m, raised concerns about the outlook for spending on cloud infrastructure. The authenticity of this figure has been widely contested.