Connect with us

Published

on

US tech firms exposed to big artificial intelligence (AI) investments are seeing their shares take a hammering over the emergence of a low-cost Chinese competitor.

The likes of Nvidia, Meta Platforms, Microsoft, and Alphabet all saw their stocks come under pressure as investors questioned whether their share prices, already widely viewed as overblown following an AI-led frenzy, were justified.

Some market analysts put the combined losses in market value, across US tech, at more than $1trn (£802bn).

Money latest: Cost of European holidays surge

Leading AI chipmaker Nvidia’s shares bled 11% in early Wall Street dealing alone, while the tech-focused Nasdaq slid by more than 3%.

The declines were all put down to the emergence late last week of a Chinese AI chatbot that uses lower-cost chips.

Start-up DeepSeek launched a free assistant that, it said, uses less data at a fraction of the cost of incumbent players’ own large language assistants.

More from Money

Brian Jacobsen, chief economist at Annex Wealth Management, said the claims had placed in doubt the market’s AI-led dominance of the past two years that have seen AI-linked stocks repeatedly hit new highs.

DeepSeek launched a free assistant it says uses less data at a fraction of the cost of the major players in the industry
Image:
DeepSeek launched a free assistant it says uses less data at a fraction of the cost. Pic: Reuters

He said of the repercussions: “It could mean less demand for chips, less need for a massive build-out of power production to fuel the models, and less need for large-scale data centres.

“However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications,” he added.

DeepSeek’s AI assistant is certainly proving popular, becoming the top-rated free application available on Apple’s App Store in the US after, overtaking ChatGPT.

It has even attracted praise from US rivals for the assistant’s performance, despite questions continuing to swirl over the 2023-founded company’s technological development.

It was achieved despite tech export controls, designed to protect US patents, imposed on China by president Joe Biden in 2021.

The share price movements will likely be of concern to his successor in the White House, Donald Trump, who has long accused Chinese firms of profiting from US technology.

Read more from Sky News:
Ryanair profits nearly 10 times higher
Hobbycraft owner circles WH Smith

It also remains to be seen whether he will see the competition as aggressive towards US firms, having already indicated he is minded to allow Chinese-owned TikTok to escape a US ban but through shared ownership to help offset national security concerns.

Russ Mould, investment director at AJ Bell, said: “The US government – both under Donald Trump and previously under Joe Biden – have been trying to stop China from accessing Western technology.

“That strategy might have backfired as it looks to have encouraged China to ramp up efforts to build its own technology and we’re now seeing evidence that the country is making waves.”

Market experts said AI customers could ultimately benefit from a share price bounce once the market settled due to improved competition bringing down prices.

Away from the United States, another company licking its wounds on Monday was SoftBank, the Japanese investment firm.

Its shares were 8% down on the day, erasing all the gains seen since last week when Mr Trump announced SoftBank was part of an investment of up to $500bn (£400bn) in US AI infrastructure.

Continue Reading

Business

Trump fires tariff threats at more nations as EU ‘ready for all scenarios’

Published

on

By

Trump fires tariff threats at more nations as EU 'ready for all scenarios'

Donald Trump has revealed a list of more nations set to face delayed ‘liberation day’ tariffs from 1 August.

He has threatened tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova and 20% on the Philippines. Sri Lanka was later told it faced a 30% duty.

Letters setting out the planned rates – and warning against retaliation – are being sent to the leaders of each country.

Money latest: HMRC issues 600,000 fines to people who owe no tax

They were the latest to be informed of the president‘s plans after Japan and South Korea were among the first 14 nations to be told of the rates they must pay on their general exports to the US from 1 August.

The duties are on top of sectoral tariffs, covering areas such as steel and cars, already in place.

Mr Trump further warned, on Tuesday, that a 50% tariff rate on all copper imports to the US was looming.

More on Tariffs

He has also threatened a 200% rate on pharmaceuticals and is also expected to take aim at all imports of semiconductors too.

The European Union, America’s largest trading partner in combined trade, services and investment, is expected to get a letter within the next 48 hours unless further progress is made in continuing talks.

Please use Chrome browser for a more accessible video player

Who will be positively impacted by the UK-US trade deal?

The bloc, which Mr Trump has previously claimed was created to “screw” the US, has been in negotiations with US officials for weeks and working to agree a UK-style truce by the end of the month.

The EU has retaliatory tariffs ready to deploy from 14 July but it is widely expected to delay them until such time that any heightened US duties are imposed.

Read more from Sky News:
Nvidia is world’s first $4trn listed firm
Greater risk to UK economy from Trump tariffs, BoE warns
What is a wealth tax and how would it work?

Please use Chrome browser for a more accessible video player

Trump to visit UK ‘in weeks’

It remains hopeful of a deal in the coming days but European Commission president Ursula von der Leyen told the European Parliament: “We stick to our principles, we defend our interests, we continue to work in good faith, and we get ready for all scenarios.”

While the UK’s so-called deal with Mr Trump is now in force, it remains unclear whether steelmakers will have to pay a 50% tariff rate, deployed by the US against the rest of the world, as some final details on an exemption are yet to be worked out.

The rate is currently 25%.

Continue Reading

Business

Nvidia wins race to become first $4trn listed company

Published

on

By

Nvidia wins race to become first trn listed company

Nvidia has become the first stock market-listed company to achieve a value of $4trn.

Its share price rose by more than 2% at the market open on Wall Street to reach the milestone moment.

It was achieved just over a year since Nvidia overcame the $3trn barrier and overtook Apple, in market cap terms, in the process.

The AI-focused chipmaker has been the darling of Wall Street for many years.

Money latest: HMRC issues 600,000 fines to people who owe no tax

The value of its shares has risen by 409,825% since its market debut in 1999.

Its status has been cemented thanks to the rush for AI technology – suffering several wobbles along the way – but nothing significant when you refer to the percentage rise of the past 26 years.

More on Nvidia

The most recent pressures have come from the emergence of the low-cost chatbot DeepSeek and concerns for global AI demand as a result of Donald Trump’s trade war hitting growth.

Financial markets have been taking a more risk-on approach to the trade war since the delays to “liberation day” tariffs in April.

It’s explained by a market trend that’s become known as the TACO trade: Trump always chickens out.

Nvidia hits $4trn valuation
Image:
The milestone is reported by Sky’s US partner CNBC, seen on screens at the New York Stock Exchange. Pic: Reuters

It has helped US stock markets post new record highs in recent days.

The wave of optimism is down to the fact that the president is yet to follow through with the worst of his threatened tariffs on trading partners.

Corporations are also yet to report big hits to their earnings – a fact that is also propping up demand for shares.

If Mr Trump does go all-out in his trade war, as he has now threatened from 1 August, then that $4trn market value for Nvidia – and wider stock markets – could be short-lived, at least in the short term.

But market analysts believe Nvidia’s value has further to go.

Read more from Sky News:
Greater risk to UK economy from Trump tariffs, BoE warns
What is a wealth tax and how would it work?

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of its meteoric rise: “Once known for powering video games, NVIDIA has transformed into a foundational player in AI infrastructure.

“Its high-performance chips now drive everything from natural language processing to robotics, making them essential to training and deploying advanced AI models.

“Beyond hardware, its full-stack ecosystem – including software platforms and developer tools – helps companies scale AI quickly and efficiently. This end-to-end approach has positioned Nvidia as a cornerstone in a market where speed, scalability, and efficiency are critical.”

He added: “The key question is where it goes from here, and while it might seem strange for a company that’s just passed the $4trn mark, Nvidia still looks attractive.

“Growth is expected to slow, and it’s likely to lose some market share as competition and custom solutions ramp up. But trading at a relatively modest 32 times expected earnings, and over 50% top-line growth forecast this year, there’s still an attractive opportunity ahead.

“For investors, it remains a compelling way to gain exposure to the AI boom – not just as a participant, but as one of its architects.”

Continue Reading

Business

Greater risk to UK economy following Trump’s tariffs, says Bank of England

Published

on

By

Greater risk to UK economy following Trump's tariffs, says Bank of England

The future of the UK economy is weaker and more uncertain due to President Trump’s tariffs and conflict in the Middle East, the Bank of England has said.

“The outlook for UK growth over the coming year is a little weaker and more uncertain,” the central bank said in its biannual health check of the UK’s financial system.

Economic and financial risks have increased since the last report was published in November, as global unpredictability continued after the announcement of country-specific tariffs on 2 April, the Bank’s Financial Stability Report said.

Money blog: €1 home goes on sale – but there are T&Cs

These risks and uncertainty, as well as geopolitical tensions, like the wars in Ukraine and the Middle East, are “particularly relevant” to UK financial stability as an open economy with a large financial sector, it said.

Pressures on government borrowing costs are “still elevated” amid significant doubts over the global economic outlook.

Had a 90-day pause on tariffs not been announced, conditions could have worsened, the report added.

More on Bank Of England

The chance of prices rising overall has also grown as tensions between Iran and Israel and the US threaten to push up energy prices.

Possible higher inflation in turn raises the prospect of more expensive borrowing from higher interest rates to bring down those price rises. This compounds the pressure on state borrowing costs.

Please use Chrome browser for a more accessible video player

Trump’s tariffs: What you need to know

Mortgages

Borrowing costs for about 40% of mortgage holders are set to become costlier over the next three years as households refix to more expensive deals, affecting 3.6 million households, the Bank said.

Many homes have not refixed their mortgage since interest rates began to rise in 2021, meaning the full impact of higher rates has yet to filter through.

Those looking to get on the property ladder got a boost as the Bank said lenders could issue more loans deemed to be risky, meaning people could be able to borrow more.

Financial institutions can now have 15% of their new mortgages deemed risky every year, up from the current 9.7%.

Riskier mortgages are those with a loan value above 4.5 times the borrower’s income.

Be ‘prepared for shocks’

Despite the global and domestic economy concerns, the outlook for UK household and business resilience remained “strong”, the Bank said.

Investors, however, were warned that there could be “sharp falls in risky asset prices”, which include shares and currencies.

Read more:
UK to miss deadline to agree steel and aluminium tariffs
M&S boss reveals new details about cyber attack on company

If there are any vulnerabilities in non-bank lenders, it “could amplify such moves, potentially affecting the availability and cost of credit in the UK”.

“It is important that in their risk management, market participants [people involved in investing] are prepared for such shocks.”

Follow The World
Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

The steep market reaction following the tariff announcements in April “highlights that the interconnectedness of global financial markets can mean stress from one market can move quickly to others,” the report said.

Overall, though, “household and corporate borrowers remain resilient”, the Bank concluded.

Continue Reading

Trending