In recent weeks, the buzz surrounding artificial intelligence has reached unprecedented heights, particularly in relation to a groundbreaking technology known as DeepSeekThis emerging trend has piqued the interest of many global investors, particularly from foreign asset management companies such as BlackRock, Lord Abbett, Schroders, and Morgan Asset Management, all of whom have begun to assess the implications of DeepSeek's technological advancements on various industries, particularly the semiconductor sector.

The excitement began just before and after the Spring Festival, a time traditionally associated with renewal and new beginningsDeepSeek has made noteworthy strides in AI, significantly impacting the landscape of technology investmentReports indicate that their latest model was developed with about 2,000 NVIDIA H800 GPU chips at a cost of around $5 million, which is a fraction of the $100 million needed for training models by leading AI companies like OpenAIThis cost-effective approach has raised eyebrows, especially given that DeepSeek claims the performance of their R1 model is comparable to OpenAI's top-tier offerings, but at just 3-5% of the cost of OpenAI’s high-end services.

Lord Abbett has noted that the innovations from DeepSeek have compelled investors to reassess the necessary hardware that will drive the ongoing AI revolutionSome major semiconductor companies have already seen a significant downturn in their stock pricesThis is largely attributed to DeepSeek's unique method of training models, bypassing the conventional supervised learning stage and directly utilizing reinforcement learning to develop its systemThis methodological shift has reportedly accelerated the model's learning process, enabling rapid refinement through a cycle of trial, error, and feedback, ultimately leading to a more adaptable and efficient AI system.

Morgan Asset Management has further emphasized the importance of DeepSeek's open-source approach, which not only promotes shared technological advancements but also fosters an innovative ecosystem

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This model encourages participation from developers globally, propelling technical iterations and expanding application scenarios in a way that invigorates the entire AI fieldCiting a phenomenon known as the “Jevons Paradox” in economics, they suggest that advancements in technology can significantly lower resource costs, thereby spurring rapid demand growth.

From the perspective of Yang Jingyu, a senior fund manager at Morgan Asset Management, DeepSeek’s emergence is not a spontaneous event, but rather the result of extensive exploration and innovation within the Chinese AI landscapeEarly contributions to this field can be traced back to Chinese entrepreneurs and scholars, primarily based overseas, who have consistently pushed for the integration of advanced technologies with local market practicesTheir efforts have culminated in globally recognized innovations, reinforcing China’s position as a pivotal hub for industrial creativity.

Yang further asserts that DeepSeek's success is emblematic of a larger industrial narrative; it showcases China's integral role in the global innovation economyHe predicts that as more breakthroughs emerge, there will be an ongoing re-evaluation of the value of Chinese tech companiesThis conclusion draws attention to the vital role these firms play in shaping the future of technology.

As the discourse continues, the semiconductor supply chain has found itself directly impacted by the enthusiasm surrounding DeepSeek's advancementsAccording to Lord Abbett, in the short term, the semiconductor sector will experience considerable volatility as markets work to comprehend the impact of these technological changes on the wider AI ecosystemThey also highlight the rise of AI computing demands, which adds uncertainty to market perceptions and could result in prolonged instabilityHowever, they note that over the medium to long term, the emergence of generative AI will still spur demand for advanced reasoning algorithms and next-generation chips.

Zou Jiangyu, a fund manager at BlackRock, emphasizes the rapid evolution of the AI sector, particularly representing Chinese advancements like those from DeepSeek

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He notes that this momentum is leading to significant opportunities for investors, as the development of artificial intelligence cements itself as a cornerstone of future industrial landscapesFollowing early fluctuations, the Chinese stock market has shown potential for recovery, notably within growth sectors that are starting to reveal structural opportunities.

According to the assessments from Lord Abbett, competition in AI devices is anticipated to continue driving strong demand within the semiconductor industry, especially for efficient application-specific integrated circuit (ASIC) chips and data center networking technologiesThey predict that the United States is likely to maintain restrictions on China accessing advanced AI chips and manufacturing tools, focusing instead on bolstering its own AI infrastructure initiatives, such as the "Gateway to the Stars” program.

The rapid emergence of budget-friendly, open-source innovations poses both challenges and opportunities in the investment landscape, notably as it undermines the current domination of major tech companies regarding capital expenditure in AIAs a result, the stock market could benefit from improved liquidity, even amid significant downturns affecting major tech stocks, allowing value and non-cyclical tech stocks to thriveFurthermore, government bonds are buoyed by increased productivity and the prospects of potential deflation, providing long-term investors with encouraging signs regarding the economic landscape.

Beyond the semiconductor chain, professionals within the industry are optimistic about how the ascendance of AI technology can open up broader investment opportunities across various sectorsZou Jiangyu suggests a strategic focus around artificial intelligence, green energy, and the industrial renaissance of Chinese manufacturing in 2025, identifying high-potential areas such as AI integration in consumer electronics, intelligent driving, and crucial infrastructure developments supporting AI applications.

In the view of Morgan Asset Management, new productive forces epitomized by AI cannot be dismissed; the technology sector remains poised to be one of the foremost investment stories for the coming years

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