KUALA LUMPUR (Jan 28): The sell-off of artificial intelligence (AI) proxies continued on Tuesday, with approximately RM23.33 billion in market capitalisation among 15 Bursa Malaysia-listed companies wiped out since mid-January this year.

The decline was fuelled by concerns over US chip export restrictions in early January, and compounded by the emergence of Chinese AI startup Deepseek’s large language model (LLM) — similar to the more commonly known ChatGPT — said to be developed at a fraction of the costs by its US counterparts.

Deepseek’s emergence contributed to a record one-day loss of US$586 billion in Nvidia Corp’s market capitalisation on Monday, the impact of which spilled over to other stocks associated with the AI race.

Among the 15 AI proxy companies tracked by The Edge, YTL Power International Bhd (KL:YTLPOWR) experienced the largest decline in market capitalisation.

The company, which is building its own data centres using Nvidia’s latest chips, saw its share price drop 22.21%, erasing RM7.3 billion in market value since Jan 13.

The decline followed the US administration’s announcement of the Interim Final Rule (IFR) on Artificial Intelligence Diffusion on Jan 13, which introduced stricter export controls on US-developed AI chips.

Weighing on YTL Power’s share price was its proposed bonus issue of up to 1.67 billion free warrants on a one-for-five basis, announced last Thursday. The warrants, which have a three-year tenure, will not be listed and cannot be traded or transferred.

Meanwhile, construction firm Gamuda Bhd (KL:GAMUDA) saw a RM4.3 billion decline in market value, with its share price retreating by 15.78% since Jan 13.

Gamuda has secured several large projects to build data centres in Cyberjaya and Sungai Buloh, with its construction order book standing at RM30 billion as of end-September last year.

Gamuda’s peers in the construction sector also saw declines in market capitalisation, with IJM Corp Bhd (KL:IJM) losing RM2.14 billion in value since Jan 13, and Sunway Construction Group Bhd (KL:SUNCON) experiencing a drop of RM1.8 billion in market value.

The property sector was not spared from the sell-off either.

Sime Darby Property Bhd (KL:SIMPROP), which is developing a data centre for lease, saw RM1.36 billion lost in market valuation, as its share price dropped 12.35%. Eco World Development Group Bhd (KL:ECOWLD), which previously sold Johor lands to data-centre developers, also lost RM1.27 billion in market capitalisation, with its share price falling 20.38%.

Nationgate Holdings Bhd (KL:NATGATE), one of the few Asean-based assemblers of Nvidia-produced graphic processing units (GPUs), lost RM1.3 billion in market capitalisation, with its share price dropping 23.18%.

In its note on Tuesday, Kenanga Investment Bank emphasised the need for more clarity on the policy response from US President Donald Trump regarding former president Joe Biden’s AI IFR. The process, expected to provide greater insight by mid-May, could help reduce uncertainty surrounding local AI proxy stocks, the house said.

“While we are not expecting Trump to rescind the IFR in whole, a less restrictive chips exports ruling following the emergence of DeepSeek would be a positive outcome for Malaysian AI/data centre-linked stocks,” it said.

An investor following the sector told The Edge that the US administration’s directive to restrict the export of powerful GPUs, intended to limit access to high-end semiconductor technology by rival nations, would be considered superfluous with the advent of DeepSeek.

“Any chip export restriction would be akin to closing the stable door after the horse has bolted,” the investor said.

Across the wider market, the Bursa Malaysia KLCI has retreated 2.07% in the Jan 13-Jan 28 period. The Nasdaq, which was unfazed by US’ chip restrictions due to its preference for US-based companies, was jolted by the DeepSeek revelation and fell 3.07% on Monday.

Aside from the changing sentiment in the AI race, equity investors also face concerns arising Trump’s plan to impose tariffs on key sectors such as semiconductors, pharmaceuticals, steel, copper, and aluminum.

Trump stated that these new tariffs, expected to exceed the current 2.5% rate, are part of efforts to protect and strengthen US manufacturing of advanced chips, according to news reports.