China’s AI success spooks US investors
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Is US AI exceptionalism under threat from China’s new technology?
So is US exceptionalism under threat when it comes to AI? Because, well, just maybe China has got something that is a bit more exceptional, but also a lot cheaper. Lots of questions now about the value of shares and how much could those concerns spread to the border economy and how long before Donald Trump uses it as a reason to be less conciliatory on his approach to China. After all, he was fairly balanced on Friday, but that was almost four days ago. His position is bound to have changed since then. It's Tuesday. It's the 28th of January, 2025. It's the morning call from NAB. Good morning. Well, the US dollar is pretty flat on the DXY, but it's down 2.4% since its most recent peak in the middle of the month.
Today, the Aussie is down 0.4%. The yen is up 0.9%. The Swiss franc up 0.5%. The euro and the pound are both quite flat. Bond yields are lower, down nine basis points for 10-year treasuries, down eight in Canada, down four in the UK and Germany. Aussie 10 years this morning, down to 4.43% from 4.47% yesterday. So down four basis points. It is stocks, though, where the big moves have really been happening. The Nasdaq is down 3% at close today. The S&P is 1.4% lower. They were both actually worse than that earlier on before the close. The Russell 2000 down 1%, but the Dow is up 0.7% in Europe. The Eurostox 50 has lost 0.6%. The FTSE 100 is flat. And oil is well down as well, 2.2% down for WTI, 2% low for Brent.
So it is the AI story dominating the news again. This time, it's China leading the pack. Here's Nabs Rudigo-Katril in Sydney. So NVIDIA shares today. Down more than 16%.
What are today’s key currency and bond market moves after the AI shock?
In Europe, Siemens Energy, who have been investing in power grids to support AI, they're down 20% at the European close. Why? DeepSeek is the word. I know it should be two words, but it's only one, DeepSeek. They've run it together. The AI engine from China, which is the most downloaded free app in the US Apple Store, with accolades about its performance and its reasoning abilities. It's got investors in the U.S. worried. And I guess people are looking and saying if they can do that on the cheap, why are we paying so much to invest in these American companies? And so there's a bit of a reassessment of the value of these companies going on, it seems.
Morning, Phil. Yes, certainly it's been a big, big wipeout in terms of anything linked to AI, with NVIDIA in particular leading those declines. And as you point out, this is not just about one company, but it really is about, to some extent, the reassessment of part of the US exceptionalism, which is this competitive advantage when it comes to high-tech technology and AI. And not only just making the chips, but it's an addition to anything that is linked to that, including data centers and so on. And of course, the big mega tech that have invested so much money into this. Now you have an alternative that it literally can make, potentially, if it's right, it can build these AI models. Like some people say, 5% of the cost of what Meta and others are paying for it.
And also, it's not just cheap. But it's also very quick and also using not the top of the range chips from NVIDIA. So it is sort of pulling the rug out of all of these AI leaders at the moment. And it's forcing a reassessment in terms of the demand for chips, for instance, for NVIDIA. And that's why NVIDIA is getting hammered. But as we mentioned, it's across the whole spectrum in terms of what AI means for data centers. And you could argue even for demand for energy because you're not going to need as many data centers. As I said, it's
affected energy stocks as well. That's one of the spin-offs out of all of this because it is learning, as I understand it. I mean, you just outlined it there. It can learn better and faster with less energy, with less processing power, and it's doing a better
job of it. And it's also, you know, they showed us how to do it. So, you know, we can go and try to do it ourselves. So let's stop doing the podcast. So, I mean,
it pulls, well, there we are, make a fortune. It really does pull the rug out from all of these tech companies.
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Chapters
6 chapters
1
Is US AI exceptionalism under threat from China’s new technology?
0:01–1:45
2
What are today’s key currency and bond market moves after the AI shock?
1:45–4:36
3
How does DeepSeek’s low‑cost AI engine work and why is it shaking NVIDIA?
4:36–8:44
4
Why are US AI‑related stocks like NVIDIA falling more than 15%?
8:44–11:33
5
Which safe‑haven assets are rising as investors flee risk after the AI news?
11:33–15:25
6
Will Trump’s tariff stance on China change after the AI breakthrough?
15:25–17:16