‘A shot across the bow at the U.S. tech world’: analysts weigh in on DeepSeek

Tech stocks have erased virtually all their 2025 gains after Chinese startup DeepSeek raised concerns about the competitiveness of the artificial intelligence field with its release of a free, open-source AI tool that founders claim was created for just $6 million. The reaction from all corners has been extreme.

Hackers, seemingly, have launched “large-scale malicious attacks” on the company’s service, causing it to temporarily limit user registrations. Nvidia investors are dumping that company’s stock, with shares falling more than 16% and the price hitting a point it hasn’t seen since last September. Analysts, though, are a bit more sanguine about the news for the most part.

Wedbush’s Dan Ives acknowledged that DeepSeek’s lower startup costs and reported use of reduced capacity chips from Nvidia was “a shot across the bow at the U.S. tech world,” but said the sell-off was a “golden buying opportunity” for investors—and the threat to other AI companies was overstated.

“DeepSeek impressed the tech community with this LLM [large language model] . . . but this is not launching 100x the capacity/algorithms that is needed to even consider this a competitive threat [to other AI companies] in our view,” Ives wrote.

Ives wasn’t alone calling this a good chance for investors to jump into the AI space. “This could be the entry point in AI stocks, Nvidia in particular, many have been waiting for,” TD Cowen analyst Joshua Buchalter wrote in a note. 

JPMorgan, meanwhile, reminded investors that it was inevitable the heavy spending on AI would eventually be reined in, pointing to the investment cycle in Cloud technology in years past as an historical example.

JPMorgan analyst Samik Chatterjee wrote that he saw the DeepSeek news “largely [as] a reminder to investors of the likelihood of an optimization phase for investments . . . to reach the best trade-off between efficiency and performance.”

Bring out the bears

There were, of course, analysts who used the DeepSeek news to ding both Nvidia and AI firms. Another JPMorgan analyst Sandeep Deshpande issued a separate note, writing “that Deepseek’s highly efficient and lower resource-intensive AI model has shown such significant innovation and success is posing thoughts to investors that the AI investment cycle may be overhyped, and a more efficient future is possible.” (Analysts from the same firm sometimes contradict each other, as they hold different opinions.) 

Jefferies Group analyst Edison Lee, meanwhile, wrote “reevaluating computing power needs could cause 2026 AI [capital expenditures] to fall (or not grow).”

Long-term bullishness

Some analysts noted that while DeepSeek might have launched an LLM for less and using technology that’s not as advanced as what U.S.-based AI companies are using, it still faces one insurmountable problem: It’s a Chinese company—and that could limit its widespread adoption.

“In an inevitably more restrictive environment, U.S. access to more advanced chips is an advantage. Thus, we don’t expect leading AI companies would move away from more advanced GPUs,” wrote Citi analyst Atif Malik.

Ives may have summed it up best, saying that while creating a chatbot is one thing, it’s not the same as creating a robust AI system.

“No U.S. [major corporation] is going to use Chinese startup DeepSeek to launch their AI infrastructure and use cases,” he wrote. “At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia. Launching a competitive LLM model for consumer use cases is one thing—launching broader AI infrastructure is a whole other ball game and nothing with DeepSeek makes us believe anything different.”

https://www.fastcompany.com/91267626/analysts-weigh-in-on-deepseek-china-ai-technology-startup?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss