DeepSeek AI Model Unveiled: Impact on US Stocks
Introduction
DeepSeek, a Chinese startup, has developed AI models with minimal capital and using inferior Nvidia chips, causing shockwaves in the stock market. JPMorgan has identified potential losers from DeepSeek's open-sourced AI model.
Market Volatility
DeepSeek's AI model initially caused a plunge in Nvidia's stock, resulting in its largest one-day market cap loss to date. However, since then, the volatility has subsided.
Potential Stock Losers
According to JPMorgan, the following eight stocks could be potential losers from the DeepSeek AI trade:
* Amphenol (APH): Demand for Amphenol's connectors could decline due to DeepSeek's potential to reduce data center power needs.
* Caterpillar (CAT): Revenue from data center backup power generators and Solar turbines could slow if power demand decelerates.
* Custom Truck One Source (CTOS): Efficiency gains from DeepSeek could impact growth in the transmission and distribution markets, reducing demand for trucks and heavy machinery.
* Cummins (CMI): Sales of engines and generators for data centers could decline due to reduced power generation needs.
* Intel (INTC): Increased compute complexity is expected to favor accelerated computing, negatively impacting server CPU demand.
* CS Disco (LAW): DeepSeek could lead to increased disintermediation in the legal industry, reducing demand for CS Disco's services.
* Oracle (ORCL): Overaggressive data center plans may be impacted by DeepSeek's efficiency improvements.
* Fabrinet (FN): Demand for Fabrinet's manufacturing solutions could decline as Nvidia's integrated solutions become less favored due to the rise of custom ASICs in hyperscale data centers.
Conclusion
While the initial market reaction to DeepSeek has subsided, its potential impact on certain stocks remains significant. Companies may adopt DeepSeek's training methodologies, leading to increased efficiency and lower costs in AI applications.