Investing.com -- The emergence of DeepSeek’s new large language model (LLM) is reverberating across the U.S. stock market, with J.P. Morgan analysts outlining key implications for sectors ranging from technology to utilities.
The brokerage suggests that while the introduction of this AI model presents cost efficiencies and new opportunities, it also introduces potential disruptions to established investment patterns and capital expenditure strategies.
J.P. Morgan analysts said that DeepSeek’s efficiency in reducing training and inference costs could significantly impact technology firms, particularly those involved in AI development and infrastructure.
Companies that stand to benefit include those operating at the application layer, where AI capabilities are deployed directly to end-users.
Salesforce (NYSE:CRM), for example, is expected to gain from a potential shift in value towards the software application sector as foundational AI models become more cost-effective and accessible.
Similarly, Snowflake (NYSE:SNOW) is positioned favorably, as the increased development of AI applications is likely to drive greater demand for modern data infrastructure.
Conversely, infrastructure-heavy companies that have invested significantly in large-scale AI training operations face potential headwinds.
Oracle (NYSE:ORCL), which has been aggressively expanding its cloud data center footprint, could see overcapacity risks if the anticipated AI investment cycle shifts more heavily toward inference rather than training.
While hyperscalers like Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL) have continued to report strong investment in AI hardware, analysts warn that the broader AI spending narrative could shift if DeepSeek’s lower-cost capabilities gain traction.
The semiconductor industry is another sector seeing mixed impacts. J.P. Morgan analysts believe that companies like NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), and Marvell (NASDAQ:MRVL) Technology could benefit from the broader adoption of AI inferencing, as these firms provide essential hardware for running AI models efficiently.
However, Intel (NASDAQ:INTC), which remains heavily reliant on traditional CPU sales, could be negatively affected as AI compute workloads continue migrating toward more specialized accelerators.
DeepSeek’s cost-efficient model also carries implications for cloud service providers and internet firms. Amazon and Google have incorporated DeepSeek-R1 into their AI service offerings, indicating a shift toward broader model accessibility.
Meta (NASDAQ:META), which has championed open-source AI models, is expected to integrate DeepSeek’s advancements into its Llama AI framework, potentially reinforcing its strategic position in the AI ecosystem.
Despite these developments, analysts note that competition among AI model providers remains fierce, and regulatory scrutiny over AI data usage could introduce uncertainties.
Beyond technology, DeepSeek’s emergence is having ripple effects across other industries. J.P. Morgan highlights the potential for AI-driven automation to reshape the security software landscape, with cybersecurity firms like CrowdStrike (NASDAQ:CRWD) and Palo Alto Networks (NASDAQ:PANW) likely to see increased demand as businesses deploy AI at a larger scale.
Similarly, companies in the communications infrastructure sector, such as Equinix (NASDAQ:EQIX) and Digital Realty (NYSE:DLR) Trust, are expected to benefit from heightened AI workload demands, particularly as inference tasks become more widespread across enterprise clients.
The financial technology and bitcoin mining sectors are also adjusting to the DeepSeek effect. Shopify (NYSE:SHOP), for instance, could capitalize on more efficient AI-driven tools for merchants, enhancing e-commerce automation and customer personalization.
However, bitcoin mining firms exploring high-performance computing (HPC) applications, such as Riot Platforms (NASDAQ:RIOT), face a more complex landscape.
While AI-driven demand for compute power remains robust, the cost efficiency of new models could shift market dynamics, potentially dampening the anticipated growth in AI-related HPC services.
In the energy sector, utilities and midstream companies initially faced investor skepticism as DeepSeek’s emergence raised concerns about AI-related power demand projections. Stocks like Constellation Energy (NASDAQ:CEG) and Vistra saw declines amid fears of reduced data center expansion.
However, J.P. Morgan analysts believe these concerns may be overblown, as long-term AI adoption trends and broader electrification initiatives continue to drive strong demand for reliable energy infrastructure.