Japanese tech stocks plunged Tuesday, mirroring a sharp sell-off on Wall Street after China’s DeepSeek introduced its R1 chatbot, which threatens to disrupt the AI market. The new chatbot reportedly matches the performance of US industry leaders at a fraction of the investment costs. This has raised concerns about the sustainability of AI investments, particularly in companies like Nvidia, which has seen its stock rise by 1,900% in the past five years.

The news sparked a sell-off in AI stocks worldwide. Nvidia saw a 17% drop, erasing over half a trillion dollars from its market value. In Japan, companies linked to AI, such as Advantest and Tokyo Electron, took significant losses. SoftBank, a major investor in Trump’s $500 billion AI infrastructure initiative, also fell more than 5%.

Meanwhile, the dollar surged after reports suggested the US might impose universal tariffs. The greenback strengthened against major currencies, including the yen, euro, and pound, amid growing concerns over a potential trade war. Analysts expect the Federal Reserve’s upcoming policy meeting to provide further insight into the economic landscape.

Markets in Asia were mixed, with Hong Kong, Singapore, and Mumbai posting gains, while other markets, including Sydney and Bangkok, saw declines.

As the AI sector faces new challenges, the impact of DeepSeek’s model and the looming trade tensions have left investors reassessing their strategies.

Channelstv