China's Seven Titans vs Wall Street's Magnificent Seven: DeepSeek Sparks Stocks Re-Rating
DeepSeek's groundbreaking app has sparked a re-rating of Chinese stocks, unleashing a torrent of money into the world's second-largest capital market, as investors reassess the valuation of US technology stocks. The low-cost large language model (LLM) offered by DeepSeek has been developed at a fraction of the cost in terms of high-powered computing, prompting investors to question the reasonableness of valuations allocated to leading edge technologies such as AI. As a result, Goldman Sachs and other global investment banks have revised their targets for Chinese stocks upwards, indicating a potential return of billions of dollars.
- The emergence of low-cost LLMs like DeepSeek's poses significant challenges to the dominance of US technology stocks, potentially forcing a re-evaluation of the valuation gap between these companies and their international peers.
- Will the influx of new capital into Chinese markets be enough to close the investment gap with Western economies, or will it simply fuel further growth and widen the disparity?