DeepSeek’s low-cost design enhances hope for China AI revolution

DeepSeek stirs nationalistic fever amid 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 financiers are rushing into AI-related stocks, wagering the artificial intelligence advance of home-grown start-up DeepSeek will result in a boom in the sector and offer the initiative to China in a heightening Sino-U.S. technology war.

Feverish buying has actually pumped up shares of Chinese chipmakers, software application designers and data centre operators in the middle of patriotic require an upward repricing of Chinese properties as U.S. President Donald Trump charges a trade war with fresh tariffs.

“DeepSeek’s advancement shows Chinese engineers are creative and capable of creations that can contend with Silicon Valley,” said China Europe Capital Chairman Abraham Zhang. “It has actually also stirred nationalistic fever in capital markets.”

DeepSeek surprised Silicon Valley and setiathome.berkeley.edu rocked Wall Street late last month with the announcement of a competitive big 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 given that seen cash gushing into AI-related stocks in mainland China and Hong Kong.

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

On the mainland, investors returning from a week-long Lunar New Year holiday on Wednesday also piled into the tech sector, improving shares of companies in AI, semiconductors, huge data and robotics.

“2025 will witness a surge of AI applications,” said Zhou Yingbo, head of investment at Futures Vessel Capital.

“We’re really positive about opportunities created by this transformation,” Zhou said, expecting extensive adoption of both AI hardware and software by customers and businesses alike.

Likely beneficiaries include Nancal Technology, Suzhou MedicalSystem Technology, Doctorglasses Chain, Bestechnic Shanghai and Ucap Cloud Details Technology, Huaxi Securities said.

The DeepSeek development shows how the U.S. effort to slow China’s technological advancement “has backfired, rather accelerating Chinese AI development,” TF Securities said in a client note. It required a repricing of Chinese technology stocks which have underperformed U.S. peers in the last few years amidst increased regulative analysis and raovatonline.org geopolitical stress.

The emergence of DeepSeek could prompt even tighter U.S. innovation export constraints but that will only welcome more government assistance and turbo-charge growth, the brokerage said.

Goldman Sachs anticipates Chinese breakthroughs in AI advancement and “could materially alter” the stock exchange trajectory.

The Wall Street bank approximates AI-enabled effectiveness improvement could increase earnings by 2% for Chinese equities, while brighter growth potential customers might result in a 20% appraisal uplift for Chinese companies, narrowing the gap with U.S. peers.

China’s “hard 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 greatest U.S. tech stocks, the so-called “Mag 7”, is 31, revealed the Goldman report dated Feb 4.

DeepSeek has actually produced such a buzz that Chinese companies up and down the AI worth chain, from chipmakers to cloud company are checking out possibilities with the startup’s affordable services, including 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 business will emerge in what he called an epoch-making revolution.

However, Wang Zhuo, partner of Shanghai Zhuozhu Investment Management, was more cautious.

“Many business are still far method from creating revenue from AI … As a worth financier, I do not feel confident putting money into these stocks.” (Reporting by Samuel Shen and Jiaxing Li