LONDON, Jan 27 (Reuters) - Technology shares around the

world slid on Monday as a surge in popularity of a Chinese

discount artificial intelligence model shook investors' faith in

the AI sector's voracious demand for high-tech chips.

Startup DeepSeek has rolled out a free assistant it says

uses lower-cost chips and less data, seemingly challenging a

widespread bet in financial markets that AI will drive demand

along a supply chain from chipmakers to data centres.

MARKET REACTION:

Nasdaq futures fell over 3%, S&P 500 futures tumbled

nearly 2%.

Dominant AI chipmaker Nvidia's ( NVDA ) 8.4% slide led

declines among heavyweight megacap stocks in premarket trading,

with Microsoft off by 4%, Meta Platforms ( META ) down

3.7% and Alphabet shedding 3.1%.

European tech stocks slid over 5%, set for their

worst day since October. Chip maker ASML fell 9.4%,

and Siemens Energy, which provides electric hardware

for AI infrastructure, slid around 20% at one point from a

record high on Friday.

Japan's Nikkei shed nearly 1%, weighed by heavyweight tech

names. AI-focused startup investor SoftBank Group fell

over 8%.

COMMENTS:

JON WITHAAR, SENIOR PORTFOLIO MANAGER, PICTET ASSET

MANAGEMENT, SINGAPORE:

"We still don't know the details and nothing has been 100%

confirmed in regards to the claims, but if there truly has been

a breakthrough in the cost to train models from $100 million+ to

this alleged $6 million number this is actually very positive

for productivity and AI end users as cost is obviously much

lower meaning lower cost of access."

"Is it negative for Nvidia ( NVDA ) in the short term? Yes, as

expectations are sky high on Blackwell (chips)and positioning is

long in anything AI supply chain related, but ultimately

anything that makes AI cheaper to implement is positive for

those selling AI related products and applications and using AI

related tools - an ever growing group."

"But let's see the devil is in the detail and as you can

imagine a Chinese model will be controversial for many uses.

Still it is a cold shower and a dose of reality for a sector

that probably needed it."

DANIEL TAN, PORTFOLIO MANAGER, GRASSHOPPER ASSET MANAGEMENT,

SINGAPORE:

"The selloff in Japan and U.S. tech names should not be a

surprise given high valuations based on P/E and P/B ratios. With

the current rate of P/E priced for some U.S. and Japan tech

names, the market is expecting future earnings to continue to

justify the high prices of these tech names. That is definitely

a high expectation to meet."

"However, DeepSeek has shown over the weekend with its

updated AI model that is cost-effective with OpenAI's technology

while running on reduced-capability chips, raising questions

over the dominance of U.S. tech firms such as Nvidia Corp. ( NVDA )"

RICHARD CLODE, TECH PORTFOLIO MANAGER, JANUS HENDERSON

INVESTORS, LONDON:

"DeepSeek appears to bringing some genuine innovation to the

architecture of general purpose and reasoning models. Given

compute restrictions in China it is not surprising that

necessity drives innovation as we saw in Russia in the 1990s

when limited access to PCs drove coding creativity and a

generation of novel Russian coders."

"As Yann LeCun (Meta's chief AI scientist) has noted, this

is a victory for the open source model of driving community

innovation with DeepSeek leveraging Meta's Llama and Alibaba's

Qwen open source models."

"However, DeepSeek is leveraging distillation techniques

that are reliant on the work of others. How reliant is a key

question the market is grappling with currently. Ultimately, we

think that creates more questions around the direct monetisation

of LLMs (large language models)and open source models than it

does about AI capex. This announcement will also draw more

scrutiny from the US around chip restrictions as well as the

proliferation open source AI models."

ALEXANDR WANG, CEO SCALE AI, (TWITTER POST)

"DeepSeek is a wake up call for America, but it doesn't

change the strategy:

- USA must out-innovate & race faster, as we have done in

the entire history of AI

- Tighten export controls on chips so that we can maintain

future leads

Every major breakthrough in AI has been American."

GEORGE LAGARIAS, INVESTMENT STRATEGIST, FORVIS MAZARS,

LONDON:

"China and DeepSeek say, at the very least, that they can

deliver what ChatGPT can deliver today at a fraction of the

cost," said George Lagarias, investment strategist at Forvis

Mazars.

"It makes sense that markets question the narrative that has

been underpinning the whole market ... It's a very frothy market

so it doesn't really take that much for investors to take some

profit."

BEN BARRINGER, TECHNOLOGY ANALYST, QUILTER CHEVIOT, LONDON:

"DeepSeek's success will serve to intensify the US/China AI

war, particularly following the recent announcement of the

Stargate project in the U.S."

"It also provides a wake up call and somewhat of a question

mark on how much needs to be spent in order to build a model,

and whether quite the level of CapEx we have been seeing is

really required."

"However, bringing the price of model training down is no

bad thing as it will help to lower the entry point and this

price elasticity could help drive usage and volume."