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DeepSeek's affordable design improves wish for China AI revolution

DeepSeek stirs 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, Feb 6 (Reuters) - Chinese financiers are hurrying into AI-related stocks, wagering the expert system advance of home-grown startup DeepSeek will lead to a boom in the sector and asteroidsathome.net offer the effort to China in a heightening Sino-U.S. technology war.

Feverish buying has actually pumped up shares of Chinese chipmakers, software application designers and information centre operators amid patriotic 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 innovative and efficient in inventions that can contend with 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 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 minute by Huaxi Securities experts and has because seen money gushing into AI-related stocks in mainland China and Hong Kong.

The Hang Seng AI Index has actually leapt more than 5% this week while indices tracking chipmakers and IT companies surged more than 11%, assisting constant 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 piled into the tech sector, improving shares of firms in AI, semiconductors, huge 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 opportunities created by this transformation," Zhou said, anticipating widespread adoption of both AI hardware and software application 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 development illustrates how the U.S. effort to slow China's technological advancement "has backfired, rather speeding up Chinese AI innovation," TF Securities said in a client note. It called for a repricing of Chinese technology stocks which have underperformed U.S. peers over the last few years amid increased regulatory analysis and geopolitical tension.

The introduction of DeepSeek could trigger even tighter U.S. innovation export constraints however that will only welcome more federal government assistance and turbo-charge growth, the brokerage said.

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

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

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

DeepSeek has created such a buzz that Chinese business up and down the AI value chain, from chipmakers to cloud company are checking out possibilities with the start-up's inexpensive services, including heavyweights such as Huawei Technologies, Alibaba and grandtribunal.org Baidu.

Yi Xiangjun, partner of Shenzhen Black Stone Asset Management, said he is "all in" China's AI and tech stocks, betting big, effective business will emerge in what he called an epoch-making transformation.

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

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