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DeepSeek's inexpensive model enhances hope for China AI transformation

DeepSeek stirs nationalistic fever amid Sino-U.S. competition

AI-related stocks in China and Hong Kong surge

By Samuel Shen and setiathome.berkeley.edu Jiaxing Li

SHANGHAI/HONGKONG, Feb 6 (Reuters) - Chinese financiers are rushing into AI-related stocks, betting the expert system advance of home-grown startup DeepSeek will result in a boom in the sector wifidb.science and morphomics.science offer the initiative to China in a heightening Sino-U.S. innovation war.

Feverish buying has actually pumped up shares of Chinese chipmakers, software application designers and data centre operators require 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 capable of innovations 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 announcement of a competitive large language model that was seemingly cheaper to establish than those of big-spending U.S. leaders such as OpenAI and Meta.

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

The Hang Seng AI Index has jumped more than 5% this week while indices tracking chipmakers and IT firms rose more than 11%, helping 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 holiday on Wednesday likewise stacked into the tech sector, improving shares of firms in AI, asteroidsathome.net semiconductors, huge 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 opportunities created by this revolution," Zhou said, expecting widespread adoption of both AI software and hardware by customers and businesses alike.

Likely beneficiaries include 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. effort to slow China's technological improvement "has actually backfired, instead speeding up 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 in recent years in the middle of increased regulatory scrutiny and geopolitical tension.

The development of DeepSeek might trigger even tighter U.S. technology export constraints but that will only welcome more federal government assistance and kenpoguy.com turbo-charge growth, the brokerage said.

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

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

China's "hard tech" stocks trade at a cost representing 23.6 times revenues, 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 developed such a buzz that Chinese companies up and down the AI worth chain, from chipmakers to cloud service providers are exploring 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, bphomesteading.com betting big, successful companies will emerge in what he called an epoch-making transformation.

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

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