From Zacks Investment Research.: 2025-01-28 13:00:26

U.S. semiconductor giant NVIDIA (NVDA) saw a 17% drop in shares after Chinese AI company DeepSeek showcased low-cost models. Other AI chip providers like Broadcom (AVGO), AMD, and Amphenol (APH) also fell. Microsoft, Alphabet, and Oracle experienced losses as well. Despite the disruption, APH, AVGO, and NVDA are expected to rebound.

DeepSeek’s models are gaining attention for their efficient performance and low costs. Their latest models rival those of U.S. tech giants like Microsoft and Meta Platforms. DeepSeek showcased a model costing $5.6 million to train, far less than Meta Platforms’ spending. DeepSeek-V3’s AI chatbot surged in popularity, comparable to Meta Platforms and OpenAI models.

DeepSeek’s low-cost models are causing concern about the excessive spending by U.S. tech giants on AI development and infrastructure. OpenAI alone is estimated to have spent $3 billion on training models in 2024. U.S. tech giants are projected to spend around $250 billion on AI infrastructure, with META planning a substantial investment in AI.

Semiconductor stocks like Amphenol, Broadcom, and NVIDIA are expected to benefit from the increasing deployment of AI technology. Amphenol’s diversified business model and strong portfolio position it well for growth. Broadcom’s AI portfolio and acquisitions have boosted its growth potential. NVIDIA’s GPUs are in high demand, especially following DeepSeek’s successful use of their chips for advanced models.



Read more at Zacks Investment Research.: 3 Top-Ranked Semiconductor Stocks to Buy Despite DeepSeek Disruption – January 28, 2025