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).

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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.

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.

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.

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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.

The owner of Hobbycraft is among a pack of suitors circling WH Smith, the 233-year-old high street chain which has been put up for sale.

Sky News has learnt that Modella Capital, whose executives have previously been involved in retailers including Paperchase and Tie Rack, is one of a handful of parties to have held discussions with WH Smith and its advisers.

The likelihood of Modella completing a deal to acquire the 500-store chain was unclear on Monday.

Modella’s executives include Steve Curtis, whose biography on the firm’s website describes his “successful transactions [as including] Jigsaw, Paperchase, Feather & Black, Rolling Luggage and Tie Rack”.

One of the firm’s investment advisers is Jamie Constable, a prominent turnaround investor who is associated with firms including Rcapital, Quilam Capital and Blazehill Capital.

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City sources said that WH Smith – which confirmed at the weekend that it was considering a sale of the business following a Sky News report – was keen to wrap up a deal during the spring.

The disposal would, if completed, leave London-listed WH Smith as a company focused on its more lucrative travel retail operation in airports, railway stations and hospitals, which comprises about 1,200 stores globally.

Modella is said to be bidding against a number of other experienced retail investors, including the Apollo-backed firm Alteri, which owns the Bensons for Beds chain.

WH Smith, which is being advised by bankers at Greenhill, declined to comment on Monday, while Modella has been contacted for comment.

A sale of its high street arm would mark a watershed moment for the UK high street, which first saw the appearance of the name in 1792.

The business, which specialises in selling items such as greeting cards and stationery, employs about 5,000 people across the country.

Run by Carl Cowling, chief executive, the disposal of its high street arm and repositioning as a pure-play travel retail company was welcomed by investors on Monday, with shares in WH Smith rising by about 2.5%.

The division recorded flat operating profit of £32m last year, with WH Smith’s travel business accounting for 75% of the company’s revenue and 85% of trading profit.

There have been questions about the future of WH Smith’s high street division for many years amid carnage elsewhere in the sector, with the likes of BHS, Debenhams and Comet all ceasing to trade from physical stores in the last 15 years.

Last week, it emerged that roughly 15 WH Smith shops would be closed this year – part of an annual rationalisation of its store estate.

In 2006, the company’s news distribution arm, now known as Smiths News, was demerged into a separate London-listed company.

Reiterating its weekend response to Sky News’s report, WH Smith told the London Stock Exchange on Monday: “WH Smith plc notes the recent press speculation regarding its high street business.

“WHSmith confirms that it is exploring potential strategic options for this profitable and cash-generating part of the group, including a possible sale.

“Over the past decade, WHSmith has become a focused global travel retailer. The group’s travel business has over 1,200 stores across 32 countries, and three-quarters of the group’s revenue and 85% of its trading profit comes from the travel business.

“There can be no certainty that any agreement will be reached, and further updates will be provided as and when appropriate.”

One of Britain’s biggest luxury boat manufacturers has collapsed into administration less than two months after it was sold to new investors.

Sky News has learnt that Fairline Yachts, which is based in Oundle, Northamptonshire, had fallen into insolvency proceedings after DF Capital, the company’s main lender, triggered the appointment of Alvarez & Marsal (A&M) as administrators.

One staff member said they had been briefed on the news by A&M on Monday morning.

Fairline Yachts is understood to employ about 250 people, with no redundancies being triggered by the insolvency.

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The collapse of Fairline Yachts is surprising because the company was only sold early last month by Hanover Investors to Arrowbolt Propulsion Systems, which was described in an announcement about the deal as a “clean propulsion technology company”.

Further details of that deal were unclear, although the statement in December said that Arrowbolt was appointing Peter Hamlyn, an experienced industry executive, as Fairline Yachts’ new chief executive.

In a statement provided in response to an enquiry from Sky News, Michael Magnay, joint administrator to Fairline Yachts Limited, said: “The business is continuing to trade as usual.

“We are thankful for the support and understanding of staff and there are no redundancies at this time.

“We are actively pursuing a sale of the business and are confident of a substantial amount of interest given the recognised brand and strong heritage.

“We encourage interested parties to make contact with us.”

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Fairline Yachts’ collapse comes nearly two years after rival Princess Yachts was sold to investor KPS Capital Partners.

Last autumn, Sunseeker, another big player in the sector, was sold to international investors Lionheart Capital and Orienta Capital Partners.