Shares of leading Chinese tech giants like Tencent, Alibaba, and Baidu have seen significant gains, fueled by excitement over the advancements of AI startup DeepSeek.
DeepSeek recently introduced its open-source reasoning model, DeepSeek-R1, which has gained attention for competing with OpenAI’s ChatGPT across several performance metrics. This achievement is impressive, especially considering that DeepSeek is using less advanced chips, highlighting the ongoing hurdles posed by U.S. export restrictions that limit China’s access to cutting-edge technology.
The model’s ability to perform similarly to well-established AI systems like OpenAI’s GPT models and Meta’s Llama, all while being much more cost-effective, has further drawn investor interest. There is growing optimism that DeepSeek’s developments will enhance the AI capabilities of major Chinese tech firms.
Market watchers expect that companies such as Tencent, Alibaba, and Baidu may collaborate with or incorporate DeepSeek’s innovative AI solutions into their operations, strengthening their position in the competitive global tech landscape.
As of Monday, Tencent’s Hong Kong-listed shares climbed 1.3%, reaching HK$395.60, while Alibaba’s stock saw a 3.5% rise to HK$87.70. Baidu shares surged by 4.2%, reaching HK$84.95, and Meituan (HK:3690) also gained 1.5%.
This surge in stock prices reflects growing investor confidence in China’s expanding AI sector, with expectations that major Chinese tech firms will capitalize on the advancements to enhance their market position.
DeepSeek AI Launch Expected to Causes $1T Loss in U.S. Markets
DeepSeek, a Chinese startup launched in May 2023, introduced open-source AI models like DeepSeek-V3 and R1, priced at just $0.55 per million input tokens. With a $6M investment in its latest model, the company focuses on AI research.
Following DeepSeek’s announcement, Nasdaq dropped over 400 points, driven by a sharp decline in chip stocks. Notable losses include Arm (-5.5%), $NVDA (-5.3%), Broadcom (-4.9%), $SMCI (-4.6%), and Taiwan Semi (-4.5%). Other stocks like Micron, $QCOM, $AMD, and $INTC also saw declines. U.S. markets are set to lose $1T+ in market cap on Monday.
