DeepSeek's affordable 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, wiki.tld-wars.space Feb 6 (Reuters) - Chinese financiers are hurrying into AI-related stocks, betting the expert system advance of home-grown start-up DeepSeek will result in a boom in the sector and offer the initiative to China in a heightening Sino-U.S. innovation war.

Feverish buying 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 charges a trade war with fresh tariffs.

"DeepSeek's breakthrough shows Chinese engineers are innovative and efficient in inventions that can take on Silicon Valley," said China Europe Capital Chairman Abraham Zhang. "It has actually likewise stirred nationalistic fever in capital markets."

DeepSeek surprised Silicon Valley and rocked Wall Street late last month with the announcement of a competitive big language design that was ostensibly more affordable to develop 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 online-learning-initiative.org has 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 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 also stacked into the tech sector, enhancing 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 very positive about opportunities developed by this transformation," Zhou said, anticipating extensive adoption of both AI software and hardware by customers and services alike.

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

The DeepSeek advancement illustrates how the U.S. effort to slow China's technological development "has backfired, instead speeding up Chinese AI development," TF Securities said in a client note. It called for a repricing of Chinese technology stocks which have actually underperformed U.S. peers in current years amidst increased regulatory examination and garagesale.es geopolitical stress.

The introduction of DeepSeek could prompt even tighter U.S. technology export constraints but that will just invite more government assistance and turbo-charge growth, the brokerage said.

Goldman Sachs expects Chinese advancements in AI development and application "might materially modify" the stock exchange trajectory.

The Wall Street bank estimates AI-enabled effectiveness enhancement could increase incomes by 2% for Chinese equities, while brighter growth potential customers could lead to a 20% appraisal uplift for Chinese firms, narrowing the space with U.S. peers.

China's "difficult tech" stocks trade at a price representing 23.6 times revenues, while "soft tech" shares trade at 13.9. The price-to-earnings ratio of the biggest U.S. tech stocks, the so-called "Mag 7", is 31, revealed the Goldman report dated Feb 4.

DeepSeek has actually developed such a buzz that Chinese companies up and down the AI value chain, from chipmakers to cloud company are exploring possibilities with the startup's low-cost 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, wagering big, effective business will emerge in what he called an epoch-making transformation.

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

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