Markets Deepseek shockwaves bounce off the SMI almost without a trace
The Swiss stock market is currently showing a strong life of its own. Although a start-up from China has at times triggered heavy losses on the US technology exchange and on some European trading venues, the leading Swiss index SMI is currently continuing to rise.
28.01.2025, 18:16
SDA
On Tuesday, the SMI broke through the 12,500-point mark for the first time since spring 2022, albeit only temporarily. On Monday, the US technology exchange Nasdaq fell by more than three percent. The cyclical German DAX was also down significantly at times. On the day of the report, tempers cooled somewhat and there was at least a slight recovery for the time being.
The stock market shock was triggered by the realization that artificial intelligence software can possibly be trained with much less computing power - and therefore also chips from Nvidia - than previously thought. The Chinese start-up Deepseek claims to have trained its new AI model at a cost of less than six million dollars and on a few slimmed-down Nvidia chip systems.
Panicked investors caused the stock market value of the US chip company Nvidia to plummet by almost 600 billion dollars on Monday, which corresponds to a drop of around 17 percent. On Tuesday, the AI chip specialist was at least able to reverse the negative trend.
Deepseek - alternative to US providers?
The stock market shock on Monday was triggered by the realization that artificial intelligence software can possibly be trained with much less computing power - and therefore also chips from Nvidia - than previously thought. The Chinese start-up Deepseek claims to have trained its new AI model at a cost of less than six million dollars and on a few slimmed-down Nvidia chip systems.
Whether this is all exactly true is not known. There was speculation in the industry weeks ago that Deepseek may have access to more Nvidia chips than it admits in view of US export restrictions.
However, investors who have been driving Nvidia's shares higher and higher in recent months in anticipation of a future mega deal got cold feet on Monday. US President Donald Trump spoke of a wake-up call for American companies - and at the same time found it "positive" that AI could be cheaper.
Who is behind Deepseek?
The company was founded in 2023 by hedge fund manager Liang Wenfeng - and is said to have secured a package of Nvidia chips. Deepseek relies on open source models where the source code is publicly available. The data is stored on servers in China.
Information that the Chinese government does not like, such as the 1989 Tiananmen Square massacre, is concealed by the chatbot. The fact that Deepseek rose to number one in the US app store for the iPhone is therefore particularly ironic in view of the crackdown on Tiktok.
Defenses catch up
Meanwhile, according to traders, the local market benefited greatly from its defensive orientation. A good half of the market capitalization of the Swiss stock exchange is accounted for by the two pharmaceutical giants Novartis and Roche as well as the food multinational Nestlé. In contrast, the proportion of technology stocks in this country is much lower.
The fact that the "defensive" stocks are so popular this year is also due to the fact that they clearly lagged behind the hyped US chip stocks last year. In addition, investors are now targeting these stocks as a safe haven due to their business model, which is considered to be less susceptible to crises.
On the day of the report, the SMI closed 0.3 percent higher at 12,455 points after reaching a high of 12,536 points. Of the 18 trading days in the year to date, the SMI has now ended 16 with a positive sign. In addition, the all-time high of 12,997 points from the beginning of 2022 is now within reach.
