Super Micro stock and others viewed as artificial intelligence plays faced a reality check early Monday.
Chinese firm DeepSeek's chatbot seemed to match the performance of the leading Western AI models but was trained for a fraction of the cost, causing worries that Big Tech may have overinvested in AI.
AI server maker Super Micro has faced an uphill battle lately after its auditor resigned, it delayed earnings reports, and was knocked out of the Nasdaq 100. It may now have to deal with another headwind.
Its shares, which trade under the ticker SMCI, were plunging 11% to $29.65 in premarket trading Monday amid a broad selloff in U.S. tech stocks. Futures tracking the Nasdaq were down 4%.
Other stocks that have been hailed as AI market darlings also fell. Software company Palantir Technologies shares were down 6.5% while producer of cooling infrastructure for data centers Vertiv Holdings plummeted 18%.
Energy stocks such as Constellation, Vistra, and GE Vernova also tumbled in the premarket as these companies benefit hugely from the additional energy demand that comes with data center buildouts necessary to meet the needs of, for example, OpenAI's ChatGPT.
Chip makers and Big Tech stocks also fell early Monday after mostly starting 2025 in the green.
DeepSeek said it spent just $5.6 million to train its open-source R1 model, although that excludes some crucial expenses such as research and development.
If it is indeed possible to produce large language models able to rival that of ChatGPT for billions less than is currently being spent by Silicon Valley, these AI plays may have less demand for their products from the likes of hyperscalers such as Microsoft, Amazon, and Alphabet -- and their days as market darlings could be over.
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