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DeepSeek's affordable design boosts 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 investors are hurrying into AI-related stocks, wagering the expert system advance of home-grown start-up DeepSeek will result in a boom in the sector and provide the initiative to China in a magnifying Sino-U.S. technology war.

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

"DeepSeek's development shows Chinese engineers are creative and capable of innovations that can contend 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 announcement of a competitive big language model that was seemingly less expensive 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 analysts and has since seen money gushing into AI-related stocks in mainland China and Hong Kong.

The Hang Seng AI Index has jumped more than 5% today while indices tracking chipmakers and timeoftheworld.date IT companies rose 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 vacation on Wednesday likewise stacked into the tech sector, boosting shares of firms in AI, surgiteams.com semiconductors, funsilo.date big data and robotics.

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

"We're extremely optimistic about chances produced by this revolution," Zhou said, anticipating prevalent adoption of both AI software and hardware by consumers 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 illustrates how the U.S. attempt to slow China's technological advancement "has backfired, instead 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 recent years in the middle of increased regulative examination and geopolitical stress.

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

Goldman Sachs anticipates Chinese advancements in AI advancement and application "could materially modify" the stock exchange trajectory.

The Wall Street bank approximates AI-enabled efficiency improvement could increase revenues by 2% for equities, while brighter development prospects might cause a 20% appraisal uplift for Chinese companies, narrowing the space with U.S. peers.

China's "tough tech" stocks trade at a cost representing 23.6 times incomes, 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 produced such a buzz that Chinese companies up and down the AI worth chain, from chipmakers to cloud provider are exploring 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, pediascape.science said he is "all in" China's AI and prawattasao.awardspace.info tech stocks, betting big, effective companies will emerge in what he called an epoch-making transformation.

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

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