By Kosaku Narioka, Ying Xian Wong and Stuart Condie

Technology stocks fell sharply in Asia after the emergence of Chinese artificial-intelligence startup DeepSeek triggered a selloff in AI-related stocks overnight and cast uncertainty over the rising demand for data centers.

SoftBank Group dropped 5.0% in Japan, and chip-testing-equipment maker Advantest slumped 11%. Australian industrial-property owner Goodman Group, which has been betting big on data centers globally, was 7.5% lower on Tuesday.

DeepSeek said it had trained high-performing AI models cheaply, without using the most advanced chips. DeepSeek's models appear to be roughly on par with top U.S. rivals on certain benchmarks that evaluate AI ability.

Nvidia, whose chips have been used to power many of the leading AI models, sank 17% on Monday, losing about $590 billion in market value in a single day.

IG market strategist Yeap Jun Rong said there might be some "sell first, think later" thinking at play, with opinions divided on whether DeepSeek will be a game-changer that reshapes the U.S. AI landscape.

The selloffs in Asian chip stocks followed their surges last week after SoftBank Group and ChatGPT maker OpenAI announced plans to invest up to half a trillion dollars in AI infrastructure in the U.S.

The rise of DeepSeek also raised concerns among investors that the demand for data centers and the use of power to run computing might not be as large as previously anticipated.

Australian data-center operator DigiCo Infrastructure REIT lost 11%. Rival data-center operator NextDC was 6.4% lower. In Malaysia, YTL Power International, a partner of Nvidia in AI infrastructure, shed 8.7%.

Malaysia has attracted significant foreign investment in data centers and AI from companies like Microsoft, Alphabet's Google and ByteDance.

Write to Kosaku Narioka at kosaku.narioka@wsj.com, Ying Xian Wong at yingxian.wong@wsj.com and Stuart Condie stuart.condie@wsj.com

(END) Dow Jones Newswires

January 27, 2025 23:49 ET (04:49 GMT)

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