A sell-off in the biggest technology companies in the United States rippled through Asia on Tuesday, with stock markets in Japan falling as U.S. and European markets appeared to stabilize.
Shares in tech companies, especially those propelled by the profit-making potential of artificial intelligence, were shaken on Monday after the Chinese A.I. company DeepSeek said it could match the capabilities of the most advanced chatbots using far fewer expensive computer chips.
On Tuesday, Japan’s tech-heavy Nikkei 225 fell 1.4 percent with Softbank, the Japanese investment firm with major A.I. holdings, falling about 5 percent. Arm Holdings, the U.S.-listed chip design company that is controlled by Softbank, dropped more than 10 percent on Monday.
Many financial markets in Asia, including those in mainland China and Taiwan, are closed this week for Lunar New Year.
Most markets in Europe bounced back on Tuesday, with the pan-European Stoxx 600 index gaining 0.6 percent in midday trading.
Futures on the S&P 500, which allow investors to bet on the index outside of typical trading hours, also nudged higher on Tuesday, after the index fell 1.5 percent on Monday. Shares in the Silicon Valley chip company Nvidia, which erased roughly $600 billion of its market value on Monday, clawed back some of the losses in premarket trading, gaining about 5 percent.
Nvidia is the standard-bearer of a group of tech giants known as the Magnificent Seven. Those stocks have led the entire market higher in recent years, with the S&P 500 posting back-to-back annual gains of more than 20 percent for the first time since the 1990s. Those lofty returns have generated views that the market has become overly dependent on the performance of just a few high-flying companies.
“While vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification beyond the Mag 7,” said Seema Shah, chief global strategist at Principal Asset Management. She said that the idea that U.S. stocks would continue an unabated rise “is now facing uncertainty,” noting that investors were contending with stubborn inflation and the prospect of hefty tariffs that could weigh on spending and economic growth.
