DeepSeek's affordable model improves hope for China AI revolution
DeepSeek stirs nationalistic fever in the middle of Sino-U.S. rivalry
AI-related stocks in China and Hong Kong surge
By Samuel Shen and Jiaxing Li
SHANGHAI/HONGKONG, Feb 6 (Reuters) - Chinese investors are hurrying into AI-related stocks, wagering the expert system advance of home-grown startup DeepSeek will lead to a boom in the sector and provide the initiative to China in an intensifying Sino-U.S. innovation war.
Feverish purchasing has actually pumped up shares of Chinese chipmakers, software application designers and information centre operators in the middle of patriotic calls for an upward repricing of Chinese properties as U.S. President Donald Trump charges a trade war with fresh tariffs.
"DeepSeek's development shows Chinese engineers are innovative and capable of innovations that can compete with Silicon Valley," said China Europe Capital Chairman Abraham Zhang. "It has likewise stirred nationalistic fever in capital markets."
DeepSeek shocked Silicon Valley and rocked Wall Street late last month with the statement of a competitive large language model that was ostensibly more affordable to develop than those of big-spending U.S. leaders such as OpenAI and Meta.
The event was explained as a watershed minute by Huaxi Securities experts and has actually considering that seen cash gushing into AI-related stocks in China and Hong Kong.
The Hang Seng AI Index has actually jumped more than 5% this week while indices tracking chipmakers and IT companies surged more than 11%, helping stable the Hong Kong market as the U.S. added a 10% tariff to Chinese imports.
On the mainland, investors returning from a week-long Lunar New Year vacation on Wednesday also piled into the tech sector, enhancing shares of firms in AI, semiconductors, huge data and robotics.
"2025 will witness a surge of AI applications," said Zhou Yingbo, head of financial investment at Futures Vessel Capital.
"We're really positive about chances developed by this revolution," Zhou said, expecting widespread adoption of both AI hardware and software application by customers and organizations alike.
Likely beneficiaries include Nancal Technology, Suzhou MedicalSystem Technology, Doctorglasses Chain, Bestechnic Shanghai and Ucap Cloud Details Technology, Huaxi Securities said.
The DeepSeek development highlights how the U.S. attempt to slow China's technological improvement "has backfired, instead accelerating Chinese AI innovation," TF Securities said in a customer note. It called for a repricing of Chinese technology stocks which have underperformed U.S. peers in the last few years amid increased regulative analysis and geopolitical tension.
The emergence of DeepSeek could prompt even tighter U.S. innovation export constraints however that will just invite more government support and turbo-charge development, the brokerage said.
Goldman Sachs anticipates Chinese breakthroughs in AI advancement and application "could materially alter" the stock exchange trajectory.
The Wall Street bank estimates AI-enabled efficiency enhancement might increase incomes by 2% for Chinese equities, while brighter development prospects could result in a 20% appraisal uplift for Chinese companies, narrowing the gap with U.S. peers.
China's "difficult tech" stocks trade at a price representing 23.6 times revenues, while "soft tech" shares trade at 13.9. The price-to-earnings ratio of the most significant U.S. tech stocks, the so-called "Mag 7", is 31, revealed the Goldman report dated Feb 4.
DeepSeek has actually developed such a buzz that Chinese companies up and down the AI value chain, from chipmakers to cloud provider are exploring possibilities with the startup's affordable services, including heavyweights such as Huawei Technologies, Alibaba and wiki.asexuality.org Baidu.
Yi Xiangjun, partner of Shenzhen Black Stone Asset Management, said he is "all in" China's AI and tech stocks, wagering big, effective business will emerge in what he called an epoch-making transformation.
However, Wang Zhuo, partner of Shanghai Zhuozhu Investment Management, was more cautious.
"Many business are still far way from creating make money from AI ... As a value financier, I don't feel great putting cash into these stocks." (Reporting by Samuel Shen and Jiaxing Li
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DeepSeek Fever Fuels Patriotic Bets on Chinese aI Stocks
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