DeepSeek's affordable model increases wish for China AI revolution

DeepSeek stirs nationalistic fever amidst Sino-U.S. competition

AI-related stocks in China and Hong Kong rise

By Samuel Shen and Jiaxing Li

SHANGHAI/HONGKONG, Feb 6 (Reuters) - Chinese investors are hurrying into AI-related stocks, wagering the artificial intelligence advance of home-grown start-up DeepSeek will result in a boom in the sector and provide the initiative to China in an intensifying Sino-U.S. technology war.

Feverish purchasing has pumped up shares of Chinese chipmakers, software application designers and data centre operators amidst patriotic calls for an upward repricing of Chinese properties as U.S. President Donald Trump recharges a trade war with fresh tariffs.

"DeepSeek's breakthrough reveals Chinese engineers are creative and capable of creations that can compete with Silicon Valley," said Capital Chairman Abraham Zhang. "It has actually likewise stirred nationalistic fever in capital markets."

DeepSeek stunned Silicon Valley and rocked Wall Street late last month with the announcement of a competitive large language model that was seemingly more affordable to establish than those of big-spending U.S. leaders such as OpenAI and Meta.

The occasion was explained as a watershed minute by Huaxi Securities analysts and forum.altaycoins.com has actually because seen cash gushing into AI-related stocks in mainland China and Hong Kong.

The Hang Seng AI Index has leapt more than 5% this week while indices tracking chipmakers and IT firms rose more than 11%, assisting steady the Hong Kong market as the U.S. included a 10% tariff to Chinese imports.

On the mainland, financiers returning from a week-long Lunar New Year holiday on Wednesday also piled into the tech sector, increasing shares of firms in AI, semiconductors, big data and robotics.

"2025 will witness a surge of AI applications," said Zhou Yingbo, wiki.asexuality.org head of investment at Futures Vessel Capital.

"We're extremely optimistic about chances developed by this transformation," Zhou said, expecting prevalent adoption of both AI software and hardware by consumers and services alike.

Likely recipients consist of Nancal Technology, Suzhou MedicalSystem Technology, Doctorglasses Chain, Bestechnic Shanghai and Ucap Cloud Details Technology, Huaxi Securities said.

The DeepSeek advancement shows how the U.S. effort to slow China's technological improvement "has actually backfired, instead accelerating Chinese AI development," TF Securities said in a customer note. It called for a repricing of Chinese technology stocks which have underperformed U.S. peers over the last few years amidst increased regulative examination and geopolitical tension.

The emergence of DeepSeek could prompt even tighter U.S. technology export constraints however that will just welcome more federal government support and turbo-charge growth, wiki.monnaie-libre.fr the brokerage said.

Goldman Sachs expects Chinese developments in AI advancement and application "could materially modify" the stock market trajectory.

The Wall Street bank estimates AI-enabled performance enhancement could increase profits by 2% for Chinese equities, while brighter development prospects could result in a 20% appraisal uplift for Chinese companies, narrowing the space with U.S. peers.

China's "difficult tech" stocks trade at a cost representing 23.6 times earnings, while "soft tech" shares trade at 13.9. The price-to-earnings ratio of the biggest U.S. tech stocks, the so-called "Mag 7", is 31, showed the Goldman report dated Feb 4.

DeepSeek has produced such a buzz that Chinese business up and down the AI worth chain, from chipmakers to cloud company are exploring possibilities with the startup's affordable services, consisting of heavyweights such as Huawei Technologies, Alibaba and Baidu.

Yi Xiangjun, partner of Shenzhen Black Stone Asset Management, said he is "all in" China's AI and tech stocks, wagering big, effective companies will emerge in what he called an epoch-making revolution.

However, Wang Zhuo, partner of Shanghai Zhuozhu Investment Management, asteroidsathome.net was more careful.

"Many companies are still far method from creating make money from AI ... As a worth investor, I don't feel confident putting money into these stocks." (Reporting by Samuel Shen and Jiaxing Li; Editing by Vidya Ranganathan and Christopher Cushing)