The ripples from DeepSeek are undoubtedly making waves across the capital markets worldwide.This phenomenon has had a noticeable impact not only on the stock prices of leading chip manufacturers in the U.S.but has also positioned Chinese companies listed in the U.S.as critical pillars of support for the market throughout this year.

As gathered from statistics by Wind,up until the last trading day in the U.S.market on February 7,the WanDe Chinese Technology Leading Index,the WanDe Chinese Stocks 100,and the Nasdaq Golden Dragon China Index have emerged as top performers,with increases of 12.22%,11.16%,and 8.3% respectively.By contrast,the WanDe U.S.Technology Seven Giants Index experienced a downturn of 1.94%,highlighting a stark divergence in market performance.

Upon closer inspection,it is evident that many Chinese companies associated with artificial intelligence (AI) have seen their stock prices rise significantly this year,propelled by growing AI interest and adoption.

Despite the early tremors in the technology sector triggered by DeepSeek’s announcement on January 27,which saw stocks of several chip giants plunge,recovery soon followed.This indicates a market that is adjusting rather than adopting a prolonged bearish outlook on semiconductor stocks.

But how significant has the influence of DeepSeek been on Chinese stocks?Looking at the WanDe Chinese Technology Leading Index,the impact of AI is not uniformly evident.Companies such as Xiaomi,BYD,and Alibaba have enjoyed stock price increases exceeding 20% since the beginning of the year.

This category predominantly features prominent internet players with a majority engaged in AI-related services or applications; however,their stock performances have not consistently reflected these advancements.

Xiaomi's stock began its steep ascent starting from January 24,while Alibaba's pricing trend since the end of January hit its highest levels since November of the previous year.

In another context,the Nasdaq Golden Dragon China Index has revealed significant growth this year,particularly among companies linked closely with AI.Notably,Tuya Smart,GigaCloud Technology,Kingsoft Cloud,and Agora all presented remarkable stock increases of 96.65%,89.45%,61.58%,and 48.08%,respectively.

Tuya Smart,which saw its stock price begin to rise around January 13,had two days,February 4 and February 6,where the stock surged by over 20% in a single day.Kingsoft Cloud followed a similar trajectory.

On the other hand,Century Link,a third-party data center service provider,has seen persistently low stock prices in the past years,with a valuation of just $9 per share as of February 7—the same level it was at back in January 2020.This recent ascent places it at a five-year high,with a significant turn-around initiated around January 21.

The year 2024 marked a turning point for Century Link,as its third fiscal quarter report revealed that AI-related orders accounted for 90% of their business.Their primary service offerings encompass hosting services (IDC),cloud services,and VPNs.

Meanwhile,the quarterly earnings report released by Tuya Smart in the same timeframe indicated that their IoT PaaS client base had ballooned to around 2,200,with a dominant 71% of total revenue derived from their Internet of Things platform as a service (PaaS).At January's CES,Tuya exhibited various AI hardware products,showcasing the company's innovative drive.

Similarly,Kingsoft Cloud's latest earnings report reflected a 16% year-over-year revenue growth primarily fueled by increased contributions from Xiaomi and Kingsoft's ecosystem alongside rising demands for AI integration in cloud services.This growth was slightly tempered by a planned reduction in lower-margin CDN services.

Agora,operating concurrently in both the U.S.and China,functions as a PaaS service provider.The company made headlines in October 2024 for its collaboration with OpenAI’s Realtime API to offer real-time conversational AI SDKs.

Although these companies have yet to release their most recent earnings reports,it remains challenging to assess the full extent of AI's impact on profitability.Nevertheless,it is evident that the current AI upswing has played a significant role in their market standing.

While Chinese stocks bask in this new-found recognition,U.S.technology giants have faced mixed fortunes,marked by a noticeable market segmentation putting pressure on valuations.As highlighted by Wind's data,out of the "Seven Giants," only Meta (up 21.99%) and Amazon (up 4.44%) have recorded stock price increases since the beginning of the year.Conversely,Tesla,Apple,and Nvidia witnessed declines,with Tesla facing the most significant drop of 10.49%.

The crux of the market instability was felt acutely on January 27,when the so-called "DeepSeek effect" sent shockwaves through global markets,extensively impacting top U.S.chip manufacturers.

Among those hit hardest was NVIDIA,whose stock plummeted 16.97% on that day.Notably,Broadcom,another significant player in AI chips,experienced a 17.4% decline,while Marvell saw a drop of 19.1%.This market response stemmed from concerns that a lower cost for AI inference would reduce the necessity for so many AI chips.However,the market adjustment following this panic revealed continuing demand for these chips,leading to a partial recovery in their stock prices.

Speculation surrounding an investment bubble surrounding NVIDIA and other chip makers had been swirling since late 2024.The recent external pressures might have assisted in mitigating some of that speculation,encouraging a much-needed correction in the secondary market.

As the Seven Giants are adapting to the economic landscape,it’s particularly striking that only NVIDIA remains yet to produce an earnings report; the others have faced stock declines largely linked to underwhelming earnings or negative projections.

Microsoft reported on January 29,followed by a 6.18% drop the next day; Google released results on February 4,leading to a 6.94% decline; Amazon saw its stock decline by 4.05% subsequent to its February 6 earnings report.Conversely,Apple,Meta,and Tesla posted gains post-earnings despite the pervasive market downward trend.

Notably,Meta stands out as the highest-gaining company among the Seven Giants thus far this year,strategically positioning itself as a key player in the open-source model landscape while also pursuing advancements in AI applications.Since the DeepSeek announcement,Meta has maintained a steady upward trajectory,indicating growing market confidence in its AI strategy.

Overall,the ramifications of the DeepSeek effect and its ripple effect through the market suggest a prevailing belief that AI inference costs will be significantly lowered.This expectation is spurring developments on the AI application front—an attitude that is already visible in China's A-share market.

U.S.technology giants,including Amazon and Microsoft,were among the first to announce their integration of DeepSeek’s model API,with NVIDIA and Intel also poised to follow suit.

In recent earnings calls,leaders of American tech companies have universally expressed admiration for DeepSeek and are exploring ways to leverage its learnings to enhance their models and technological capabilities.

The trajectory of U.S.tech companies going forward is closely intertwined with their strategic positioning and the tangible outcomes of their initiatives,particularly regarding innovations on the application side,which will be watched closely by market participants.