DeepSeek's low-cost model boosts expect 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 financiers are hurrying into AI-related stocks, betting the artificial intelligence advance of home-grown start-up DeepSeek will lead to a boom in the sector and give the effort to China in a magnifying Sino-U.S. innovation war.

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

"DeepSeek's advancement shows Chinese engineers are creative and efficient in innovations that can complete with Silicon Valley," said China Europe Capital Chairman Abraham Zhang. "It has actually also 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 design that was ostensibly less expensive 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 has since seen money 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 IT firms surged more than 11%, assisting constant 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 stacked into the tech sector, improving shares of firms in AI, semiconductors, big data and robotics.

"2025 will witness an explosion of AI applications," said Zhou Yingbo, head of financial investment at Futures Vessel Capital.

"We're really positive about chances produced by this transformation," Zhou said, expecting extensive adoption of both AI software and hardware by customers and companies alike.

Likely recipients consist of 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 development "has actually backfired, rather accelerating Chinese AI innovation," TF Securities said in a client note. It called for forum.batman.gainedge.org a repricing of Chinese technology stocks which have actually underperformed U.S. peers recently in the middle of increased regulative examination and geopolitical tension.

The introduction of DeepSeek might trigger even tighter U.S. innovation export constraints however that will just invite more federal government assistance and turbo-charge growth, the brokerage said.

Goldman Sachs expects Chinese advancements in AI advancement and application "might materially change" the stock market trajectory.

The Wall Street bank approximates AI-enabled performance enhancement might increase profits by 2% for Chinese equities, bytes-the-dust.com while brighter growth potential customers could cause a 20% appraisal uplift for Chinese firms, narrowing the space with U.S. peers.

China's "difficult tech" stocks trade at a price representing 23.6 times earnings, 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", utahsyardsale.com is 31, revealed the Goldman report dated Feb 4.

DeepSeek has produced such a buzz that Chinese companies up and down the AI value chain, from chipmakers to cloud provider are checking out possibilities with the startup's low-priced 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 large, effective companies will emerge in what he called an epoch-making transformation.

However, larsaluarna.se Wang Zhuo, surgiteams.com partner of Shanghai Zhuozhu Investment Management, was more careful.

"Many companies are still far way from creating revenue from AI ... As a worth financier, I do not feel great putting cash into these stocks." (Reporting by Samuel Shen and Jiaxing Li; Editing by Vidya Ranganathan and Christopher Cushing)