Not all AI stocks are falling after the rise of DeepSeek
New developments from Chinese artificial intelligence company DeepSeek sparked a route in many companies tied to the AI trade. DeepSeek rattled markets as its team claimed its AI model uses cheaper chips and less data than the popular American AI models.
Notable stocks falling today include chip names like Nvidia (NVDA) and Broadcom (AVGO), which are down more than 15% each. Companies like Vistra (VST), which has been seen as a beneficiary of the increased power needed to operate AI servers, also saw a massive sell-off on Monday.
But one part of the AI trade is holding up OK. Several AI software stocks, including Salesforce (CRM), Hubspot (HUBS), and Workday (WDAY), are actually higher on Monday. Those companies fall into a basket of stocks strategists have highlighted as likely to be the next generation of the AI trade as investors move from focusing on the infrastructure buildout to corporates that will see increased sales and profits from using AI within their business.
These companies, unlike their chip counterparts, wouldn't be hurt by less investment being needed to build out AI like DeepSeek has teased out. In fact, they might even benefit from it.
"If you do bring down the cost of using AI, then some of the other 493 companies [in the S&P 500], or more than that, may benefit," Truist co-chief investment officer Keith Lerner told Yahoo Finance on Monday.
The Nasdaq Composite (^IXIC) sank more than 3% on Monday as Chinese startup DeepSeek put in question US dominance over artificial intelligence and valuations for chip bellwether Nvidia (NVDA).
The S&P 500 (^GSPC) dropped roughly 1.5% while the blue-chip Dow Jones Industrial Average (^DJI) bucked the trend to rise 0.6%, lifted by shares of Apple (AAPL) and software giant Salesforce (CRM).
Claims by China's DeepSeek that its AI model is more efficient and less expensive spooked the markets, sending AI bellwether Nvidia down almost 17%. Nvidia wiped out a record $589 billion in market value during Monday's session.
