Tech companies can profit from Chinese AI breakthrough

It is far from all tech giants that have taken a beating after the unexpected Chinese AI breakthrough, with Deepseek. Apple and Meta - among the largest players in the sector - can instead rejoice at rising stock prices after the news of good, but significantly cheaper AI models.

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Tech companies can profit from Chinese AI breakthrough
Photo: Andy Wong AP/TT

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Wall Street's reaction was brutal to the Chinese AI breakthrough with Deepseek – which unexpectedly quickly managed to build a new AI model, called R1, on cheaper and less advanced equipment than corresponding AI models in the USA.

Historic price collapse

The most severe blow was taken by American Nvidia, which with its advanced AI chips belongs to the absolute biggest winners of the rapid AI development in recent years. Nvidia's share plummeted 17 percent in Monday's trading – a price collapse that wiped out 589 billion dollars (corresponding to 6,500 billion kronor) of the company's market value.

This is in itself a new historic record when it comes to price collapses on Wall Street. And it brings the company's market value down to 2,900 billion, which can be compared to Nvidia's historical top valuation of 3,620 billion in November.

Many other American AI shares are following suit – in some cases significantly. Among the leading players in the sector, you find Broadcom, which is plummeting 17.4 percent, Oracle, which is falling 13.8 percent. And Microsoft, which owns 49 percent of Open AI, backed down 2.1 percent.

But it's far from the entire technology sector that's being affected – on the contrary. Among the technology giants with some of the largest AI budgets in the world – that is, leading users of the new AI technology – Facebook owner Meta is rising 1.9 percent, iPhone manufacturer Apple is rising 3.2 percent, and e-commerce giant Amazon is rising 0.2 percent.

Profiting from cheaper AI

Amazon is expected to increase its investments in AI infrastructure this year from last year's 75.4 billion to 86.1 billion dollars, according to a compilation of forecasts made by Bloomberg. Facebook owner Meta is expected to increase its AI investments to 52.1 billion, up from last year's 38.2 billion.

And iPhone manufacturer Apple – the world's highest-valued company and which last year seriously joined the AI race with Apple Intelligence – is immediately pointed out by several analysts as a company that directly profits from the costs now being pressed by new AI models from China.

Apple focuses on how to integrate AI as a product rather than on building the most advanced models, says William Kerwin, analyst at Morningstar, to Business Insider.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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