ASX slightly higher, mostly escaping DeepSeek turmoil

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ASX slightly higher, mostly escaping DeepSeek turmoil

The local share market is slightly higher at midday – although data centre operators and uranium developers had fallen sharply following the frenzy sparked by ******** artificial intelligence startup DeepSeek.

At midday on Tuesday, the benchmark S&P/ASX200 index was up 13.2 points, or 0.16 per cent, to 8,422.1, while the broader All Ordinaries gained 6.9 points, or 0.08 per cent, to 8,667.3.

Over the weekend DeepSeek launched its AI model DeepSeek-R1, which is said to rival the power of ChatGPT at a fraction of the cost and computing power.

The AI assistant quickly shot to the top of Apple’s App store amid curiosity about the technology, while US chip stocks plunged.

Nvidia plummeted 16.9 per cent to its lowest level since October, while AMD dropped 6.4 per cent and Broadcom fell 17.4 per cent.

Saxo chief investment strategist Charu Chanana said that by developing cutting-edge AI models using less advanced and more cost-efficient hardware, DeepSeek was challenging the heavy investments that US tech companies were pouring into high-cost AI infrastructure.

“This raises critical questions about whether the traditional capital-intensive approaches are sustainable in the long run,” Ms Chanana said.

The ASX doesn’t have many artificial intelligence companies, but other firms that have gained in recent months on the AI narrative were struggling on Tuesday.

Uranium developers Bannerman Energy, Lotus Resources and Deep Yellow were down by between 20.3 and 16.8 per cent at midday, while Peninsula, Boss Energy and Paladin had faded by between 13.1 and 10.7 per cent.

Data centre operators Nextdc, Goodman Group and Digico Infrastructure REIT were down 5.4, 8.2 and 10.8 per cent respectively.

Until now the thinking around AI was that the technology would need to be powered by massive electricity-hungry data centres, perhaps powered by nuclear energy.

Janus Henderson international portfolio manager Richard Clode said that the market had rapidly shifted from concerns that AI capital expenditure was too high, to now worrying that AI capex was going to collapse.

“Both cannot happen simultaneously, and the truth likely lies in between,” Mr Clode said.

Elsewhere, the big banks were all higher, with ANZ up 1.0 per cent, Westpac adding 1.2 per cent, NAB advancing 1.1 per cent and CBA up 0.7 per cent.

In the heavyweight mining sector, BHP was up 0.7 per cent and Fortescue had gained 0.8 per cent, while Rio Tinto had slipped 0.2 per cent.

Goldminers were lower as the precious metal changed hands at $US2,740 an ounce, with Northern Star down 2.6 per cent, Westgold dipping 2.7 per cent and Gold Road Resources falling 4.7 per cent.

The *********** dollar was buying 62.61 US cents, from 63.01 US cents at Friday’s ASX close.

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