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Investing.com -- Piper Sandler analysts downplayed concerns about the potential impact of DeepSeek's AI advancements on Tesla (NASDAQ:TSLA), concluding the implications are "neutral at worst."
In a research note, Piper Sandler noted that DeepSeek’s ability to develop high-performing AI models with lower capital expenditures could actually benefit Tesla.
"As a consumer of GPUs (a spender of capex), Tesla may actually benefit from this trend," the analysts wrote.
The firm emphasized that Tesla’s artificial intelligence approach is fundamentally different from DeepSeek's.
"Tesla is pursuing a different kind of artificial intelligence (Elon calls it ‘real world A.I.’). Instead of using the Internet as a trove of Test-Based data to train Chatbots, Tesla is using Vehicles as a trove of Camera-Based data to train Robots," they said.
Tesla’s competitive advantage is said to lie in its fleet of vehicles purpose-built to collect data for Full Self-Driving (FSD) technology.
Piper Sandler highlighted that competitors would require similar manufacturing systems and workforce expertise to rival Tesla's data collection capabilities.
“In this regard, we think Chinese auto companies are laggards. Xiaomi’s CEO has stated his company is perhaps 5-10 years behind Tesla,” the analysts pointed out.
The firm believes Tesla’s unique focus on camera-based data and its entrenched advantage in FSD development position the company to remain a leader in its niche.
Piper Sandler maintained its Overweight rating and $500 price target on Tesla shares.