Celestica Inc. (CLS) shares plummeted over 22% in the intraday trading session on Monday, underperforming the broader market. The steep decline came as the tech sector was rattled by the emergence of DeepSeek, a low-cost AI model from China that challenges the conventional thought that companies like Celestica need expensive, cutting-edge computer chips and massive energy supplies for AI applications.
The Canadian-American supply-chain solutions company has been leaning into AI for various applications, including energy delivery and improving predictions on its platform. One of its key products, the DS5000 switch, is a networking device designed for modern data centers to meet the growing use of AI technology.
Unlike many Western rivals, DeepSeek claims to use less-advanced chips combined with innovative model-training methods, potentially disrupting the high-cost investment in the sector. This development has raised concerns about Celestica's exposure to AI-related capital expenditures and its ability to continue gaining market share in the rapidly evolving AI landscape.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.