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ASX slips as DeepSeek weighs on tech, data centres

Nicola Blackburn

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Technology, electricity and data centre companies tumbled on the ASX on Tuesday, spooked by a sharp sell-off of Nvidia after Chinese start-up DeepSeek released its R1 artificial intelligence model.

The S&P/ASX 200 Index closed down 0.1 per cent, or 9.8 points, to 8399.1, reversing earlier gains as six of the 11 industry groups finished lower. The All Ordinaries slipped 0.2 per cent to 8644.5.

Modest gains in the ASX’s blue chip banks and mining stocks prevented the local bourse from mirroring the sharp losses on Wall Street overnight amid fears the DeepSeek AI model could derail models developed in the US.

Around $1 trillion was erased from market darling Nvidia on Monday with industry observers worried that DeepSeek had caught up, at a fraction of the cost, with American firms that are at the forefront of generative AI and had helped drive equity markets to record levels.

That concern has stretched to data centre operators and electricity companies around the world as the training and development of DeepSeek’s model appears to require significantly less power capacity.

“The application [of DeepSeek’s model] will be far wider because the cost to a Salesforce or a Meta will be far lower,” Betashares’ senior investment strategist Cameron Gleeson said. “On a net basis, it’s negative for hardware companies, such as data centres and Nvidia, but it’s probably a net positive for software.”

On the ASX, NextDC tumbled 7.3 per cent to $14.75, while industrial property manager Goodman Group – which has been pivoting to data centre development – fell 8.2 per cent to $35. Data centre investment trust DigiCo dived more than 11 per cent to $4.22.

Major electricity suppliers and coal miners, which supply coal to generate electricity, also sold off, as it emerged that DeepSeek’s model appears to require less electricity than existing generative AI models.

Origin Energy shaved off 3.4 per cent to $10.97 and AGL lost 2.3 per cent to $11.43. Yancoal retreated 3.7 per cent to $6.06 and Whitehaven Coal dropped shed 4 per cent to $6.05.

The sell-off extended to the uranium miners, amid concern that the more efficient AI could reduce demand for nuclear power. Paladin Energy and Boss Energy posted the index’s largest losses, plunging around 10 per cent each.

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