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DeepSeek's low-cost model increases hope for China AI revolution

DeepSeek stirs nationalistic fever amidst 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 lead to a boom in the sector and offer the effort to China in a magnifying Sino-U.S. technology war.

Feverish purchasing has actually pumped up shares of Chinese chipmakers, software designers and wiki.snooze-hotelsoftware.de information centre operators amidst patriotic calls for an upward repricing of Chinese possessions as U.S. President Donald Trump charges a trade war with fresh tariffs.

"DeepSeek's development reveals Chinese engineers are imaginative and capable of inventions that can complete 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 forum.altaycoins.com rocked Wall Street late last month with the statement of a competitive big language design that was ostensibly cheaper to develop than those of big-spending U.S. leaders such as OpenAI and bybio.co Meta.

The event was explained as a watershed moment by Huaxi Securities experts and has actually since seen cash gushing into AI-related stocks in mainland China and .

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

On the mainland, investors returning from a week-long Lunar New Year vacation on Wednesday likewise stacked into the tech sector, enhancing shares of firms in AI, semiconductors, big information and robotics.

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

"We're very positive about chances developed by this revolution," Zhou said, expecting widespread adoption of both AI software and hardware by customers and services alike.

Likely beneficiaries consist of Nancal Technology, Suzhou MedicalSystem Technology, Doctorglasses Chain, fraternityofshadows.com Bestechnic Shanghai and Ucap Cloud Details Technology, Huaxi Securities said.

The DeepSeek development illustrates how the U.S. attempt to slow China's technological improvement "has actually backfired, instead accelerating Chinese AI innovation," TF Securities said in a client note. It required a repricing of Chinese innovation stocks which have underperformed U.S. peers over the last few years amidst increased regulative scrutiny and imoodle.win geopolitical stress.

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

Goldman Sachs expects Chinese developments in AI advancement and application "could materially modify" the stock market trajectory.

The Wall Street bank approximates AI-enabled performance enhancement might increase earnings by 2% for Chinese equities, while brighter growth prospects 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 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", is 31, addsub.wiki showed the Goldman report dated Feb 4.

DeepSeek has developed such a buzz that Chinese companies up and down the AI value chain, from chipmakers to cloud company 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, surgiteams.com said he is "all in" China's AI and tech stocks, wagering large, effective companies 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 producing make money from AI ... As a worth investor, I don't feel positive putting cash into these stocks." (Reporting by Samuel Shen and Jiaxing Li; Editing by Vidya Ranganathan and Christopher Cushing)