Technology shares stabilised after a worldwide sell-off on Monday spurred by doubts about artificial intelligence (AI) capital spending, as investors put the reckoning behind them and looked ahead to earnings reports by the so-called Magnificent Seven tech firms – Apple, Google parent Alphabet, Amazon.com, Meta Platforms, Microsoft and Tesla.
But the world’s 500 richest people, led by Nvidia chief executive Jensen Huang, lost a combined $108 billion (£87bn) in the turmoil, according to calculations by the Bloomberg Billionaires Index.
The sell-off came after AI chatbot app DeepSeek rose to the top of Apple’s iOS free US download charts over the weekend, drawing attention to the one-year-old start-up and its low-cost AI model.
The company said its models performed on par with the likes of OpenAI’s ChatGPT or Anthropic’s Claude, but was trained for a fraction of the cost.
That raised questions about the effectiveness of tech companies’ billions in capital spending on AI over the past two years.
An alliance of tech firms last week promised to spend $500bn on AI infrastructure in the US in a plan backed by the US administration, while Meta announced on Friday it would spend $60bn to $65bn on AI this year.
Capital spending across the biggest tech companies is expected to reach some $200bn this year, according to Bloomberg estimates.
So far that spending has generated little revenue, but investors have pumped up stocks with AI exposure on the expectation that they would come to dominate the field.
Nvidia has been the chief beneficiary of the AI boom, as the dominant provider of AI chips, and Nvidia was one of the biggest losers on Monday, with Huang’s personal fortune dropping by $20.1bn, or 20 percent, Bloomberg said.
Huang’s fortune had grown almost eight-fold to $121bn from the beginning of 2023 through Friday, according to the news agency.
Oracle founder Larry Ellison saw a $22.6bn loss, but this represented only 12 percent of his fortune, while Michael Dell lost $13bn and Binance Holdings co-founder Changpeng “CZ” Zhao dropped $12.1bn.
Technology leaders’ losses represented $94bn of the decline, or roughly 85 percent of the total, an indicator of their prominence on the list of 500 wealthiest people.
Shares of Apple, Meta and Amazon were largely unaffected by the DeepSeek news and gained slightly.
On Tuesday tech shares rebounded somewhat, with the Nasdaq 100 up 1 percent and Nvidia rising 2.7 percent after the largest one-day loss in its history.
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