DeepSeek vs Trump, the first war between the two giants, shakes the investment world

Just one month later, the global stock market has been hit by Black Monday (February 3) as a new round of the global trade war has come as scheduled. The Trump administration announced trade tariffs on three countries, with China being hit with a 3% tariff, while Canada and Mexico were hit with 10% tariffs each, causing stock markets around the world to plummet.

Before the crisis could end, the buffalo came along one after another. At the beginning of the year, the world was dragged down by the global stock market atmosphere, which was dragged down again and again by the impact of two major waves.

The first wave from China launched DeepSeek-R1, a new low-cost AI chatbot, shaking up the AI ​​world on January 29. Until now, the situation of tech stocks has not recovered amidst the world's AI polarity turning point, surrounded by dust. It is difficult to read the game of "China VS the United States", who is superior? Because the technology world is developing new innovations endlessly. The competition will only become more intense in the future.

The second wave comes after the trade war that started this month. Although Canada and Mexico have now negotiated an extension, which has helped ease the stock market somewhat, there is still uncertainty as the world is in Trump's hands for the next 4 years. Turbulence is possible.

For China, which has been the main conflicting party with the United States for many years, starting from the Trump 1.0 era, China has had to constantly adjust its economic structure from the old way to a digital economy for more than 7-8 years, secretly preparing to deal with every aspect that Trump attacks on trade, and has been accelerating the creation of a domestic economic base to reduce dependence on foreign countries, especially the United States, all along. Therefore, now that Trump 2.0 has returned, at this hour, China has nothing to fear from the United States anymore, whether it be the Trade War or the Tech War that is about to occur.

China launched the DeepSeek-R1 chatbot app just days before Trump announced trade tariffs, a declaration that the world must be impressed by China and a signal that it is ready to overthrow the United States at any time. In the past few years, the United States has used its superpower status to block China from accessing various technologies through trading partners, resulting in the Tech War, but China has struggled to survive and get through it.

China is a country with a lot of startups, and one of them is a unicorn startup, “DeepSeek,” an AI technology company founded by Chinese fund High-Flyer.

The reason why DeepSeek is getting a lot of attention is because of the huge cost difference between China's DeepSeek and the US's OpenAI. OpenAI spent $7 billion in 2567 to develop its latest AI model, while DeepSeek spent only $5.6 million to develop it. While it has been said that DeepSeek's actual cost may be higher than the announced figure, it is still around 90% lower than the investment of US AI companies, most of whom spend billions of dollars per year.

China's AI pole-changer came earlier than expected, as DeepSeek emerged as a major challenger in the AI ​​space, competing with world-leading models such as OpenAI's ChatGPT and Meta's Llama 3.1. While DeepSeek's AI can perform at a similar level to OpenAI, the US is immediately at a disadvantage.

The world is watching to see how the US will turn the tables, what form the acceleration of AI development will take to surpass China, and how it will intensify competition in the future. How will the raging Tech War affect technology stocks, especially the large number of technology stocks on the US stock market?

While in the past 2 years, US technology stocks have continuously adjusted upwards, especially the group of 7 angel stocks that have plummeted since the launch day of DeepSeek, led by Nvidia stocks, which fell 16.91% in a single day, causing a loss of market cap worth about 6 billion US dollars, or equivalent to the GDP value of Thailand, and the other 6 angels Tesla, Apple, Amazon, Google, Microsoft, Meta, while mid- and small-sized tech stocks were shaken along with Chinese tech stocks that were also hit and fell.

Everyone has questions about how scary the current situation is, or is it a temporary trend, and is the trend of technology stocks still a long-term investment? Let's look at the analysts' perspectives.

Analysts at Wedbush view the current situation as a temporary market reaction, while DeepSeek’s ability to deliver high-performance AI at a low cost is due to its innovative approach and cost-effective hardware. However, Wedbush maintains that leading technology companies still have an advantage, with strong ecosystems, modern infrastructure, and diversified portfolios.

Personally, I think that US AI technology companies are less directly affected, with Nvidia shares falling more than 16.91% due to concerns about AI infrastructure. Other AI infrastructure companies, such as data center builders and microchip manufacturers, have also seen their share prices drop significantly due to similar concerns. Meanwhile, if we look at the shares of companies that focus on AI software, such as Apple, Amazon, and Meta, their prices have increased, reflecting that the market still believes in software more than infrastructure.

The stock market remains bullish on the US AI capabilities, but the correction comes as the realization that billions of dollars in investment in microchips and power for AI clusters may no longer be necessary, as China can tap into lower costs. The DeepSeek-R1 phenomenon is a major wake-up call for the US, and we are likely to see more small AIs emerge in the future.

However, what remains to be seen is how much of DeepSeek’s market share will be tangible, as China currently does not have an AI model that has a significant market share, which is a more important issue than the success of creating AI at low cost.

Let's take a look at the movements of the US tech giants. "SoftBank" announced that it is not afraid of DeepSeek and is currently negotiating to directly invest another $2.5 billion in OpenAI shares! This is an increase from the $1.5 billion that they are already preparing to invest in the Stargate JV.

As “Mark Zeukerberg” reiterated that this year will be a “big year” for Meta stocks and that the company’s AI Assistant system will have more than 1 billion users this year, Meta stocks have continued to surge to All Time Highs after announcing a profit increase of almost +50% in the fourth quarter of last year.

I still believe that the world will continue to be driven by AI in the long run. Although DeepSeek-R1 may not be able to compete with the top models immediately, with reduced costs, it may help small businesses to access AI more, which will lead to more intense competition in many industries. In addition, if AI is developed with sufficient efficiency (Good Enough), it will be able to lead market changes as well as the most advanced AI. Especially if there are AI-infused products such as smartphones, if the total cost of ownership can be significantly reduced, it will be beneficial to future economic growth.

Kasikorn Research Center has analyzed the data in depth to see who will benefit. If DeepSeek invests at a low cost as announced, it will affect the entire supply chain. Most of the beneficiaries will be in the downstream part, while those who are negatively affected will be in the upstream part of the AI ​​supply chain.

The winners of this change are downstream companies that have started to use AI in their business, such as e-commerce and marketing, where the proportion of AI usage is expected to increase from 65% to 70-80% within 2-3 years.

In addition, Chinese technology companies such as DeepSeek, Alibaba, and ByteDance will be able to increase their share of the AI ​​service market from less than 10% to 25% within 1-3 years as lower AI development costs allow them to compete seriously in the global market and reduce their reliance on US technology.

Another group that will benefit is organizations and developers who focus on open-source AI development, and smaller organizations such as startups will have access to higher-potential AI, significantly intensifying competition in industries such as manufacturing, logistics, finance, and health technology.

The losers, perhaps the hardest hit, are manufacturing and data center operators, especially data center energy providers, whose stock prices fell 18.8-21.0% in a single day after DeepSeek-R1 was released. This was due to long-term investments, such as Talen, which invests in nuclear power plants for data centers.

In addition, companies building Hyperscale Data Centers or AI Clusters face challenges as customers may turn to lower-cost solutions such as On-Premise AI or General Cloud Solutions instead.

Another industry that will be impacted is high-end chipmakers like Nvidia, ASML, and TSMC, as the AI ​​market shifts from a competition for processing power and speed to one of resource efficiency, potentially making 2nm chip fabrication unprofitable for the $3 billion already invested.

However, as I mentioned earlier, the stock market is facing two major waves. Therefore, the DeepSeek-R2 phenomenon will further fuel the conflict between the Chinese government and the Trump government through the trade war and the Tech War will probably intensify, which will lead to adjustments in AI policies of both countries.

For the opportunity of technology stocks, will they continue? Jitta Wealth sees this group as one of the industries with long-term growth and playing an important role in driving global innovation. However, you should choose midstream to downstream businesses such as semiconductors and industries related to AI that are in high demand. If you choose stocks of mid-sized and small-sized technology companies in the US, you will find that their valuations are still relatively cheap compared to large technology companies. If you are interested in which US tech stocks are still interesting to invest in, you can view in-depth analysis of individual stocks from the inside of Jitta Ranking. US technology stocks that our AI has selected are technology stocks with good prospects and are still cheap, so that investors have the opportunity to create good returns in the future. Because the market in the next 1-4 years will face the main risk of "the world in Trump's hands". Therefore, I recommend that you carefully consider the information before deciding to invest.

Having read this far, I think you should see the investment opportunities in which tech stocks will continue, right? For those who hold technology stocks, I recommend that you check your health to see if you are still in a group with a future or if you are in a group that is at a disadvantage. How should you adjust your investment portfolio? I recommend that you consult an investment advisor first.

And anyway, I would like to remind you that if you are going to invest more, don't forget the investment principles of VI. Focus on holding quality stocks, businesses with future growth, and strong financial statements as the basis for deciding to invest or continue holding stocks.