DeepSeek's Impact on A-Shares: A Financial Forecast

The recent surge of interest surrounding DeepSeek has set a remarkable precedent for the efficient utilization of computational power through algorithmic innovationThis has sparked heightened expectations among market participants for the applicability of the DeepSeek open-source models, particularly in accelerating AI applications on the edgeThe implications of this technology are not just confined to theoretical discussions; they are reshaping investment landscapes and influencing stock performances across the globe.

During the festive season of the Lunar New Year, the term "DeepSeek" became the focal point in overseas markets, dramatically impacting stock prices of major American tech companies, often referred to as the "Tech Seven Sisters." On January 27, NVIDIA's stock suffered a staggering drop of nearly 17%, marking the largest single-day loss of market value in the history of the United StatesThis downturn was symptomatic of broader turmoil that tech stocks faced at that timeConversely, in Hong Kong, the Hang Seng Index saw a rally, rising by 572 points on February 4, driven by a surge in semiconductor-related tech stocksThe dramatic shifts in these markets highlight the interconnectedness of technological advancements like DeepSeek and investor sentiment.

The Chinese A-share market did not lag behind, as this DeepSeek-themed sector demonstrated vigorous pre-holiday activitySeveral stocks in this category reached their maximum allowed gains on the last trading day before the holidayThe buzz surrounding DeepSeek, however, was not solely attributed to its functionalities; it also coincided with a tightening of chip sanctions, thereby attracting attention from multiple institutional research reportsAnalysts noted that the rise of DeepSeek would not only accelerate the development of AI hardware but also present fresh growth opportunities for domestic chip manufacturers involved in production and design.

Amidst this backdrop, the potential of DeepSeek to drive a spring market rally, particularly within the AI sector, is drawing considerable analysis

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As the market enters the Year of the Snake, the unfolding implications of this technology on the reevaluation of the domestic AI industry chain and resultant performance metrics will gradually become clearer.

On the last trading day before the holiday, several listed companies, including Daily Interaction (300766.SZ), Zhaochuan Information (301299.SZ), and Putian Software (300996.SZ), recorded a limit-up gain in their stock prices, indicating heavy investor interest in companies associated with DeepSeekMany firms commented on the relationship of their business operations with DeepSeekWhile most of these companies, including Daily Interaction, confirmed a lack of current collaboration with Huanshan Quantitative Analysis, the curiosity among investors remained palpableAs of the evening of February 4, Daily Interaction disclosed that it neither held shares in DeepSeek or Huanshan Technology nor had it provided any corpus data for related developments.

Zhaochuan Information also released a statement clarifying that, as of the date of the announcement, there was no business partnership with Huanshan QuantitativeTheir operational status had not undergone any significant changes, raising questions about the nature and timing of potential collaborations that could influence future profits.

There has been a notable rise in investor inquiries via the exchange's Interactive Easy platform, especially during the last trading session before the holidayVarious software development companies, such as 360 (601360.SH) and C&Top (603636.SH), faced a barrage of questions about their connections to DeepSeekTraditional industries were not left out, with companies like Hangang Co. (600126.SH) attracting similar queries regarding their operations.

The rise of DeepSeek appears to be steering broader trends in the AI marketPredictions for 2025 highlight that it may be a pivotal year for AI applications, which are increasingly entwined in daily lifeAs the number of paying users for various AI applications continues to climb, DeepSeek's presence could enhance developer engagement in model development and utilization, fostering a cycle of growth and innovation.

Its low-cost, open-source model is lowering barriers for entry into AI development, encouraging more organizations and developers to experiment with AI agents and a multitude of application scenarios

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Analysts from Tianfeng Securities have posited that while the widespread adoption of AI applications faces challenges, the structural impact of DeepSeek, characterized by its powerful reasoning capabilities and low computational costs, could significantly bolster the dissemination of AI applications.

Research from Guosheng Securities indicates that DeepSeek's influence will extend to domestic computing power investments, particularly regarding Chinese power chips and AI hardwareFirstly, the cost-effectiveness of domestic graphics cards for inference applications is expected to rise significantly due to DeepSeek's open-source nature, presenting promising ROI for chip manufacturersSecondly, the technological advancements driven by DeepSeek are also anticipated to stimulate growth within the edge computing sector, lowering operational costs for AI applications and hardware.

The secondary market has correspondingly reflected these expectationsThroughout January, the market robustly engaged with the AI theme, facilitating substantial gains in various sectors including Internet of Things controllers and optical devices, each observing increases ranging from 6.24% to 23.35%. Stocks associated with AI concepts outperformed their peers, demonstrating market sentiment around DeepSeek's potential.

Among the stocks that displayed prominent gains prior to the holiday, many are recognized for their AI edge capabilitiesFor instance, Meige Intelligent (002881.SZ) reached a two-year high, achieving significant growth in net profit attributed to increased demand for high-performance module products across diverse applications such as cloud servers and drones.

As institutional interest in the AI sector continued to gain traction, a notable number of companies emerged as focal points for investor inquiries, further evidence of the growing momentum in AI investmentIn the period leading up to the holiday (January 21-27), a total of 15 listed companies received attention from over 20 institutional investors, withบาง companies seeing interest from more than 50 institutions