Shares in ASML plunged on Monday alongside other AI companies as $1 trillion was wiped off the stock market in a single day, after Chinese AI chatbot DeepSeek shocked investors with an open-source model that offered comparable performance to U.S. competitors but was allegedly produced at a fraction of the cost. 

The news sparked an aggressive selloff of semiconductor stocks, most notably AI darling Nvidia, as investors worried demand for pricier AI chips would collapse.

While tech companies like Meta, Microsoft, and Google largely recovered Monday’s losses as investors speculated they could benefit from cheaper input costs, Nvidia’s shares remain depressed as experts question the conventional wisdom that expensive equipment is needed to produce AI models.

ASML produces lithography machines used by companies, including Nvidia, to produce computer chips, leaving the group exposed to any reduction in demand for sophisticated chips.

However, according to ASML’s boss, falling costs only present an opportunity for the company and its peers. 

Moore’s law

In a Q&A during ASML’s fourth-quarter earnings call—a session that was dominated by the sudden emergence of DeepSeek—CEO Christophe Fouquet suggested onlookers shouldn’t have been so surprised by the arrival of a new player in the AI race.

“I know some of you maybe were surprised in the last few days that a new company suddenly comes and wants to compete,” Fouquet said. “Well, I think we have to get used to that, because this is such an opportunity that there will be more and more players to grab this.

“AI is a huge opportunity,” he later added. “Therefore, I think you should expect to see a few elephants in the room in the next few months, or few years, because everyone will want to be in.”

While Fouquet warned of continued disruption, he was adamant that falling costs in the industry can only benefit ASML and the wider tech ecosystem.

While the French CEO said he didn’t have any opinion on DeepSeek’s V3 and R1 AI models, he pointed out that the two major barriers to AI expansion were currently costs and the extensive energy consumption required to operate AI models. 

Fouquet argued DeepSeek’s emergence could help address the former issue of high rollout costs for AI models and cited the phenomenon of Moore’s law that has guided semiconductor innovations for decades.

“Moore’s law is about reducing cost every single generation so that you create more opportunity,” said Fouquet. “So I will say, in general, that any technology, whatever it is, that will contribute to a cost reduction over all of AI, will increase the opportunity. This has been true in this industry for the last 40 to 60 years. I think it’s still true moving forward.”

In the wake of Monday’s AI selloff, Fortune’s Jeremy Kahn pointed out that the increased accessibility of affordable AI models could actually increase the demand for AI. This was in line with the Jevons Paradox phenomenon.

“Taken across the economy, this may cause overall demand for computing power to skyrocket, even as each individual computation requires far less power,” Kahn wrote.

Shares in ASML jumped nearly 9% in early Wednesday morning trading after the group released full-year results for 2024, offsetting most of its losses on Monday. The group reported a huge jump in bookings for its machines in the fourth quarter, suggesting strong demand for its products amid ongoing disruption in the AI space.