AI stocks experiencing decline due to market turmoil and DeepSeek disruption, with uncertain future implications.

From Morningstar: 2025-04-10 06:11:00

Artificial intelligence stocks have been falling after a rally in 2024 due to market turmoil and the DeepSeek disruption. The recent sell-off was triggered by lower training costs for language models and high valuations. Uncertainty in the market, including tariff news, has contributed to the decline.

Epigenetic AI is a promising innovation in the industry, combining technologies like machine learning and natural language processing. Potential applications range from personal assistant tasks to advanced functions like drug discovery. Google’s AlphaFold model is already discovering new drugs, showcasing the potential of AI in various fields.

The US-China AI battle is intensifying, with export controls limiting Chinese access to advanced hardware. Despite different innovation paths, both countries continue to push the boundaries of AI technology. DeepSeek’s cheaper R1 model has sparked competition, raising questions about the dominance of American AI giants in the future.

Investment opportunities lie in companies like Broadcom, ASM International, and Applied Materials. Broadcom benefits from the growing demand for customized chips, while ASM specializes in advanced semiconductor manufacturing technology. Applied Materials, as the largest semiconductor equipment manufacturer, is well-positioned to meet the increasing demand for advanced foundry capacity.

Josh Sambrook-Smith of GAM Investments highlights the opportunities and challenges in the AI sector, emphasizing the need for innovation and adaptation in the face of market shifts. The future of AI stocks remains uncertain, but companies with strong technological capabilities and market positioning are likely to thrive in the evolving landscape.



Read more at Morningstar: 3 AI Stocks to Watch in 2025