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DeepSeek's affordable design improves wish for China AI revolution

DeepSeek stirs nationalistic fever in the middle of Sino-U.S. competition

AI-related stocks in China and Hong Kong surge

By Samuel Shen and Jiaxing Li

SHANGHAI/HONGKONG, shiapedia.1god.org Feb 6 (Reuters) - Chinese investors are hurrying into AI-related stocks, betting the expert system advance of home-grown startup DeepSeek will cause a boom in the sector and offer the initiative to China in an intensifying Sino-U.S. innovation war.

Feverish purchasing has pumped up shares of Chinese chipmakers, software application designers and information 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 breakthrough shows Chinese engineers are creative and efficient in developments that can take on Silicon Valley," said China Europe Capital Chairman Abraham Zhang. "It has also stirred nationalistic fever in capital markets."

DeepSeek shocked Silicon Valley and rocked Wall Street late last month with the statement of a competitive big language model that was seemingly less expensive to establish 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 because seen cash gushing into AI-related stocks in mainland China and Hong Kong.

The Hang Seng AI Index has actually jumped more than 5% today while indices tracking chipmakers and IT companies rose more than 11%, assisting consistent 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 vacation on Wednesday likewise stacked into the tech sector, boosting shares of companies in AI, semiconductors, big information and robotics.

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

"We're extremely positive about chances produced by this revolution," Zhou said, expecting prevalent adoption of both AI software and hardware by customers and organizations 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 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 called for a repricing of Chinese innovation stocks which have underperformed U.S. peers over the last few years in the middle of increased regulatory examination and geopolitical stress.

The emergence of DeepSeek might prompt even tighter U.S. innovation export constraints but that will just invite more federal government support and turbo-charge development, the brokerage said.

Goldman Sachs anticipates Chinese developments in AI development and application "might materially modify" the stock market trajectory.

The Wall Street bank estimates AI-enabled efficiency enhancement could increase earnings by 2% for Chinese equities, library.kemu.ac.ke while brighter development prospects might lead to a 20% appraisal uplift for Chinese companies, narrowing the space with U.S. peers.

China's "tough tech" stocks trade at a price representing 23.6 times profits, 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", disgaeawiki.info is 31, showed 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 service companies are checking out possibilities with the startup's low-priced 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, betting large, successful business will emerge in what he called an epoch-making revolution.

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

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