Australian tech stocks plunge at DeepSeek rattles market
Local tech stocks with exposure to AI and data centres have fallen as much as 20 per cent as China’s answer to ChatGPT causes deep unease across the market.
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Australian tech stocks have taken a major hit overnight after the public launch of a China’s competitor to ChatGPT rattled the market.
Data centre giant NextDC fell as much as 7.8 per cent in early trading on Tuesday to reach $14.43, the company’s lowest price since mid-February last year.
Shares in investigative software and analytics provider Nuix have taken the largest fall, opening at $3.30 after closing at $5.41 on Friday. Shares in the company are down 20 per cent over the past five days.
Goodman Group, which is in the midst of a transition from an industrial warehouse operator to a data centre giant, also tumbled in early trading, opening at $35.19, down more than six per cent over the past five days.
Network services provider Megaport has sunk 6.3 per cent to $8.02 despite consensus from some analysts the company could benefit from DeepSeek’s entry into the market.
HMC capital and its digital infrastructure REIT, which it listed in November last year with an enterprise value of $4.3bn, has also taken a hit.
HMC was trading down 5.2 per cent to $8.96 in early trading while its REIT was down 11.1 per cent to $4.24.
The sharp falls mirror the US, where global tech companies have all taken a hit.
Nvidia fell 16 per cent, Oracle fell 12 per cent and Microsoft dropped 4 per cent overnight.
Analysts expect companies with exposure to AI-related investments and technology, particularly data centres, will take a sharp hit throughout the day.
While some spectators have aired concerns over DeepSeek’s supposed ability to perform similar to OpenAI’s ChatGPT and how it could reduce demand for data centres, Citi analysts have vowed the opposite.
But, some remain optimistic, noting short-term hits could be outbeat in the long term.
Citi analysts expect Goodman Group to do well overall, commenting its portfolio was “well positioned” with 5GW capacity.
“In our view, DeepSeek most likely drives further demand for data centres globally with advanced computational capabilities, high capacity storage, robust networking, energy efficient designs and infrastructure,” they said.
“Our current view is to still expect strong demand for the data centre category from a combination of expanding AI demand and core digital transformation needs with average annual incremental demand of around 10GW within our global model.”
This demand could subside if global demand for data centres fell, they said.
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