Another DeepSeek moment? What's really behind the tech sell-off

Tech stocks are selling off Friday, continuing a poor week, and there could be more to the rout than meets the eye. The apparent trigger for the sell-off is a Thursday report from the New York Times that OpenAI is considering holding off on its initial public offering due to the lackluster performance of SpaceX shares following its own IPO, along with recent volatility in tech stocks. But analysts are pointing to a Chinese artificial intelligence model that looks like it could give OpenAI and its main competitor – Anthropic – a run for their money as a potentially much bigger problem for the tech sector. The launch of GLM5.2 by Hong Kong-listed Z.ai, formerly known as Zhipu AI, is "almost equal" to Anthropic at just a fraction of the price, a Jefferies strategist said. Such a cost advantage could take corporate customer share away from the U.S. frontier models ahead of their IPOs. "This new model is almost equal to Anthropic as a competitor for the corporate market and is just one quarter of the cost in terms of cost per token," Christopher Wood at Jefferies said in the note, citing industry sources. He described the past week to clients as "another DeepSeek moment." Traders at Morgan Stanley on Thursday said the new model from Z.ai has "very impressive coding capabilities." "Enterprises and hyperscalers trading down to cheaper models looks more like a recalibration in willingness to pay for AI, not a deterioration in demand for AI," the traders wrote. …