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Investing.com -- Wedbush analyst Dan Ives dismissed the recent DeepSeek-driven sell-off in tech stocks as a "tech AI head fake" and sees it as a "golden buying opportunity" for investors.
According to Ives, the panic surrounding the Chinese AI firm’s low-cost, high-performance model is overblown and will not disrupt the long-term trajectory of the AI revolution.
"This DeepSeek tech-driven sell-off will be historically noteworthy in market history," Ives wrote, emphasizing that it does not reflect a genuine threat to AI spending trends.
"We expect more innovation in AI and LLM model costs to come down... that is ultimately a great thing for computing power, use cases, and where the tech world is going in this 4th Industrial Revolution."
DeepSeek, dubbed the "Temu of AI" by Ives, claimed to have developed its model for just $6 million without using Nvidia (NASDAQ:NVDA)'s modern GPUs, sparking investor concern. Ives likened the situation to an elementary school art project: impressive at first glance, but with underlying assistance.
"Two days later you find out that kid’s parent is a well-known architect... Now you view the project dramatically different," Ives quipped.
Despite the noise, Ives remains bullish on AI spending. "We have spoken to many enterprises heading down the AI path... in no way does DeepSeek make them flinch on spending seven/eight figures of their IT budgets over the next year on AI initiatives," he said, predicting $2 trillion in AI capital expenditures over the next three years.
In Ives' view, DeepSeek’s advancements showcase China’s AI progress but do not pose a threat to major players like Nvidia, Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN).
"DeepSeek created an awesome LLM model (and credit to its software developers), however, this Chinese AI small lab/LLM model is not bringing down the entire US tech ecosystem with it," Ives concluded.