0046 GMT - There's a risk of further correction in the U.S. stock market if it becomes clear that AI models can be trained effectively with less high-end computing power, says Capital Economics. Claims that China's DeepSeek spent little training its AI model compared with rivals in the U.S. has hit shares of semiconductor firms, whose products are used to power AI, says CE's John Higgins. AI enthusiasm has pushed U.S. markets to record highs, leaving it vulnerable to perceived "bad" news that could undermine the dominance of firms that powered the rally, the markets economist says. If AI models require less spending, that could be detrimental for the semiconductor industry, but a double-edged sword for hyperscalers--cutting capital costs, but undermining their dominance, he adds. (fabiana.negrinochoa@wsj.com)
(END) Dow Jones Newswires
January 27, 2025 19:46 ET (00:46 GMT)
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