DeepSeek's inexpensive design improves wish for China AI revolution

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

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 expert system advance of home-grown startup DeepSeek will lead to a boom in the sector and offer 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 amid patriotic require an upward repricing of Chinese properties as U.S. President Donald Trump recharges a trade war with fresh tariffs.

"DeepSeek's breakthrough shows Chinese engineers are imaginative and capable of inventions that can contend with Silicon Valley," said China Europe Capital Chairman Abraham Zhang. "It has also stirred nationalistic fever in capital markets."

DeepSeek surprised Silicon Valley and rocked Wall Street late last month with the statement of a competitive big language model that was seemingly cheaper to develop 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 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%, helping steady the Hong Kong market as the U.S. added a 10% tariff to Chinese imports.

On the mainland, financiers returning from a week-long Lunar New Year holiday on Wednesday likewise piled into the tech sector, increasing shares of companies in AI, addsub.wiki semiconductors, vmeste-so-vsemi.ru huge information and robotics.

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

"We're extremely positive about opportunities produced by this revolution," Zhou said, expecting widespread adoption of both AI hardware and software application by consumers and organizations alike.

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

The DeepSeek advancement highlights how the U.S. attempt to slow China's technological improvement "has actually backfired, rather accelerating Chinese AI development," TF Securities said in a customer note. It called for a repricing of Chinese innovation stocks which have actually underperformed U.S. peers recently amid increased regulatory examination and geopolitical tension.

The introduction of DeepSeek could prompt even tighter U.S. innovation export constraints however that will only welcome more federal government support and turbo-charge development, galgbtqhistoryproject.org the brokerage said.

Goldman Sachs anticipates Chinese breakthroughs in AI advancement and application "might materially change" the stock exchange trajectory.

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

China's "difficult tech" stocks trade at a cost representing 23.6 times profits, wiki.asexuality.org while "soft tech" shares trade at 13.9. The of the biggest U.S. tech stocks, the so-called "Mag 7", is 31, utahsyardsale.com 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 service suppliers are exploring possibilities with the start-up'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, sitiosecuador.com betting large, trademarketclassifieds.com successful business will emerge in what he called an epoch-making revolution.

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

"Many business are still far method from creating benefit from AI ... As a worth financier, I don't feel positive putting cash into these stocks." (Reporting by Samuel Shen and Jiaxing Li