European chip stocks are likely to benefit from the widespread growth of DeepSeek, a new economical yet cutting-edge artificial intelligence model developed in China, according to analysts. Chinese AI developments contributed to the rude awakening for Big Tech stocks this week. Shares of chip designer Nvidia , a huge beneficiary of the AI hype , were down 13% on German stock exchanges on Monday. Microsoft , Amazon and Google , three large cloud computing providers, were also lower by about 4%. Investors are concerned that DeepSeek’s Chinese AI model was developed in just two months at a cost of under $6 million — a much smaller expense than the amount generally called for by Western counterparts. However, equity analysts at JPMorgan said that not all chip stocks are alike. European semiconductor companies, such as ASML , are suppliers to chip makers TSMC , Samsung and Global Foundries , and profit from manufacturing volume growth rather than higher value sales of a small number of AI chips. The analyst suggested if DeepSeek was deployed on laptops and smartphone devices, it could drive up growth in chip volumes, benefiting ASML , ASMI and VAT Group. All three stocks are also traded in the U.S. “The data centre driven AI growth has not resulted in the volume growth in semiconductors that drives a big semiconductor cycle,” said JPMorgan’s Sandeep Deshpande and Anchal Sahu in a note to clients on Jan. 27. “Thus actually, counter intuitively, if DeepSeek’s AI assistant that can run on low compute power notebooks and possibly smartphones takes off and takes AI to the consumer market, that would be a significantly positive scenario for semiconductor equipment, even if that is accompanied by a slowdown in the growth of enterprise AI chips.” There’s evidence that consumers are already being drawn to DeepSeek in large numbers. The AI Assistant app has overtaken rival ChatGPT to become the top-rated free application available on Apple’s App Store in the U.S., according to app data research firm Sensor Tower. “If the stock decline for European semi cap companies continues, we think it is likely to create bargains for investors not involved,” the analysts added.
