The emergence of DeepSeek has not only stirred excitement among investors but has also sparked a renewed interest in Chinese internet firms that previously faced skepticismThis pivotal moment signifies a potential shift in the perception of these companies, particularly regarding their capabilities in harnessing artificial intelligence, leading to a fresh wave of evaluations and investment considerations.

The recent performance of the Hang Seng Tech Index, which reported a remarkable 9% increase last week and over 20% gain over the past month, underscores this emerging trend and is indicative of a bullish sentiment returning to the marketAnalysts suggest that DeepSeek’s success is a key driver behind this positive momentum.

According to Jian Shi Cortesi, an investment portfolio manager at Switzerland's leading independent asset management firm, Gam Investment Management, the focus of investors is transitioningShe articulated, "The attention on DeepSeek has shifted the lens through which investors view large Chinese internet companies from a fearful perspective focused on risks to one that emphasizes potential." This change bodes well for the sector, especially when considering the fact that many of these firms are still trading at a significant discount compared to their American counterparts.

Despite the recent upward trajectory, the Price-to-Earnings ratio of the Chinese tech stocks traded in Hong Kong stands at below 17 times, significantly lower than the Nasdaq 100’s valuation of 27 times, and even beneath its five-year average of 25 timesAlex Au, managing director of Hong Kong-based Alphalex Capital Management, pointed out that the previous lack of interest from foreign investors and market liquidity had contributed to the perception of the Chinese stock market as a "value trap". However, with DeepSeek capturing international investors' attention, he anticipates a narrowing of this valuation gap.

DeepSeek is not alone in heating up the interest towards Chinese AI companies

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Following the unveiling of DeepSeek’s capabilities, Alibaba announced its latest AI model, which contributed to a 13% rise in its Hong Kong-listed shares within the same weekOther tech giants like Tencent, Baidu, and ByteDance are also launching competitive products, indicating a robust AI-driven environment within China.

In the global landscape of technology investments, there is a palpable shift as overseas investors turn their focus to AI advancements, understanding that these innovations hold transformative potential that could reshape industry dynamics and consumer behaviors across various dimensions.

DeepSeek’s technological breakthroughs are anticipated to act as catalysts for accelerating AI adoption both within enterprises and for consumersBusinesses across traditional manufacturing to emerging sectors such as fintech and e-commerce are increasingly keen to leverage AI capabilities to enhance operational efficiency, optimize customer service, and innovate product developmentThe innovations driven by DeepSeek will empower businesses to transform intelligently at lower costs and greater efficienciesFor instance, in the manufacturing sector, companies can employ DeepSeek-based AI systems for real-time process monitoring and optimization, allowing them to predict equipment failures accurately, perform preventative maintenance, and significantly minimize production downtimes, thereby boosting product quality and overall productivity.

From a consumer standpoint, the AI applications propelled by DeepSeek are set to provide more personalized and convenient servicesSmart voice assistants, for example, are evolving to understand user requirements better, offering nuanced life adviceMoreover, intelligent recommendation systems which analyze consumer preferences and behaviors can enhance shopping experiences by suggesting products and content tailored to individual needs, thereby increasing the efficacy and satisfaction of consumer decision-making.

It's important to highlight that the transformation triggered by DeepSeek could also yield substantial cost advantages for large enterprises

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In the realm of AI, these players typically allocate significant financial resources towards research and development, server procurement, and data storage needsHowever, with DeepSeek's innovative technical architecture and algorithmic optimization, these expenses could be markedly reducedFor instance, by employing efficient model training techniques, DeepSeek decreases reliance on expensive computational resources, resulting in lower procurement and maintenance costs for hardwareConcurrently, its sophisticated data processing technology enhances data utilization, curtailing costs associated with data storage and transmissionThis duality allows large enterprises to maintain their technological edge while simultaneously minimizing operational costs, thus improving both profitability and competitiveness in the market.

The dependence of AI infrastructure on cloud computing makes the current wave of AI development particularly advantageous for providers such as Alibaba and TencentCloud computing has emerged as a crucial support system for AI advancement, facilitating the requirements for computational resources and data storage services essential for training AI models and deploying applicationsAlibaba's Aliyun has positioned itself as a key player in the cloud domain, offering stable and efficient services to a multitude of enterprises thanks to its extensive market reach and technological capabilitiesThe AI revolution spurred by DeepSeek is anticipated to catalyze demand for such cloud computing services even further, allowing Alibaba to potentially expand its market share and enhance its service offeringsSimilarly, Tencent Cloud's unique technological strengths and diverse application scenarios enable it to provide robust cloud computing solutions that are increasingly intelligent, catering to varied client needs in the AI era.

As Alex Au from Alphalex Capital Management noted, "The introduction of cheaper and more powerful models by DeepSeek is likely to assist in the proliferation of AI in China and stimulate both usage and expenditures

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