DeepSeek's AI Breakthrough: JPMorgan Predicts Winners and Losers in Tech Industry

Don't panic, Nvidia will actually be a DeepSeek winner, JPMorgan says

The Hangzhou-based artificial intelligence startup sent shockwaves through both Silicon Valley and Wall Street last month after raising questions about Big Tech's big spending on AI infrastructure. But despite the AI-driven stock rally losing $1 trillion in value, JPMorgan U.S. Equity Research analysts said in a new report that DeepSeek will likely have a positive impact on companies such as Amazon (AMZN-2.51%), Meta (META+0.27%), and Google (GOOGL-7.81%) parent Alphabet, as well as chipmaking leader Nvidia (NVDA+4.25%). The Chinese startup launched its open-source DeepSeek-R1 reasoning models in January that performed on par with similar models from OpenAI and Anthropic, while its open-source DeepSeek-V3 model released in December also performed competitively with AI models from the U.S.-based companies -- for far less money and less advanced chips. According to the V3 technical paper, the model cost $5.6 million to train and develop on just under 2,050 of Nvidia's reduced-capability H800 chips. U.S. firms, meanwhile, are spending billions on tens of thousands of Nvidia's more powerful H100 chips, which are not allowed to be sold to China under U.S. export controls. DeepSeek's demonstration of cost-efficiency and AI innovation will lead to "strong demand" for higher performance graphics processing units, or GPUs, JPMorgan analysts said Wednesday. "Therefore, Nvidia's leadership in advanced AI chips "should enable them to unlock new use-cases." Other chip firms such as Broadcom (AVGO+4.90%), Marvell (MRVL+5.69%), and Micron (MU+2.76%) are also likely to benefit from DeepSeek, according to JPMorgan. Chip pioneer Intel (INTC+1.79%), however, stands to lose out from DeepSeek, analysts said, because demand for its central processing units, or CPUs, will decrease as amid the shift to accelerated computing. JPMorgan analysts also said they "believe the broader Internet ecosystem should benefit" following the open-source AI model advancements demonstrated by DeepSeek and China's Alibaba (BABA-3.02%). The improved cost efficiency "should accelerate" AI development and adoption, leading to more consumption, the analysts said, adding that they "expect heavy capital expenditures investment" by Amazon, Alphabet, and Meta to continue in the medium term. Meta is expected to benefit from increased open-source model adoption as it builds its next-generation open-source Llama 4 model, JPMorgan said. During the company's fourth-quarter earnings call, Meta chief executive Mark Zuckerberg, who touts open-source AI models as "good for the world," said DeepSeek's breakthrough shows the need for a global open-source standard led by the U.S. Amazon, which introduced DeepSeek-R1 in its cloud platforms, will likely benefit from providing more open-source AI model options, analysts said, because it will increase AI demand and usage, driving monetization. Meanwhile Alphabet is also likely to benefit from the lower training and inferencing costs demonstrated by DeepSeek, JPMorgan said, because it will be able to accelerate development and adoption of AI agents, as well as other AI applications such as Google's NotebookLM and Gemini Advanced with Deep Research. Google on Wednesday made its "most capable" AI model, Gemini 2.0, available to everyone. At its unveiling in December, Google chief executive Sundar Pichai said Gemini 2.o "will enable us to build new AI agents that bring us closer to our vision of a universal assistant."

JPMorgan picks the stock winners and losers after cheap DeepSeek upends AI trade

DeepSeek's status as an artificial intelligence disruptor might actually benefit some stocks in the space, according to JPMorgan. Stocks sold off across the board last week after Chinese startup DeepSeek emerged as a powerful threat to existing AI investments. Specifically, DeepSeek's relatively inexpensive costs -- combined with its high efficiency -- raised concern over the the level of capital being funneled into the space by companies in the last few years, and whether it was all necessary. Since the market meltdown, stocks have managed to claw back a substantial portion of their losses, partially due to the notion that DeepSeek's emergence could benefit the technology space. "A key theme to come out of their analyses is the potential for reduced training and inference costs, which could lead to balancing acts between (1) the decreased need for large-scale investment in current applications versus the rapid propagation of new AI applications that were previously not economically viable; and (2) a potential value shift both up to the application layer (inferencing) and down to the infrastructure layer (training)," wrote JPMorgan analyst Claudia Hueston in a note to clients. JPMorgan compiled a list of stocks that will see both positive and negative impacts from DeepSeek's influence. Below are some of the winners: Cloud stock Snowflake was listed by JPMorgan as a potential beneficiary. "We see limited exposure to commoditization at the foundational model development layer, while this evolution may enable more AI apps to be built and in turn create greater needs for modern data infrastructure," wrote JPMorgan analyst Mark Murphy. Most Wall Street analysts are currently bullish on Snowflake, although the average price target implies just a 4% upside, according to LSEG. Shares have fallen more than 14% over the past 12 months. JPMorgan also highlighted Broadcom as another potential winner. "Historically, new technology innovation cycles (especially compute efficiency) have driven increased proliferation/demand, which has resulted in more/higher value semiconductor demand as well," wrote analyst Harlan Sur. "Broadcom is the #1 custom ASIC supplier supporting key cloud/hyperscalers including Google, Meta, and OpenAI -- Broadcom also enables strong compute efficiency unlock via their #1 position networking silicon." Wall Street consensus towards Broadcom is overwhelmingly bullish, and the stock's average price target corresponds to a 5% potential upside, LSEG data shows. The semiconductor manufacturer has soared 85% in the last 12 months. The broader internet ecosystem should also benefit from DeepSeek's advancements and cost efficiencies, wrote JPMorgan analyst Doug Anmuth -- Specifically highlighting "Magnificent Seven" giants Amazon , Alphabet and Meta Platforms. "We expect META to benefit from DeepSeek as it builds on new model advances & incorporates them into Llama 4 (launching early 2025) & future versions," he wrote. "At 4Q earnings, META reiterated the benefits of open source LLMs, noted that costs can be driven down, & -- in light of DeepSeek -- emphasized the importance of having an American standard for open source that extends globally." Most analysts covering Meta have assigned the stock either a strong buy or buy rating, LSEG data shows. Shares of Meta have surged 56% in the last 12 months. There are some potential losers, however: One notable name on the list was semiconductor manufacturer Intel . The stock has lost more than half of its value over the past year as the company struggles to keep up with rivals such as AMD and Nvidia. According to JPMorgan, DeepSeek's impact could exacerbate Intel's woes. "As compute complexity continues to grow, we believe there will be a continued shift to accelerated computing, which would negatively impact server CPU demand," Sur added. Most analysts covering the stock are currently neutral on its outlook, although Intel's average price target implies a nearly 33% upside, according to LSEG. Other possible losers include Oracle, which has soared 47% over the past 12 months.

JPMorgan Picks Winners, Losers After DeepSeek Debut: How Alphabet, Amazon, Intel And Oracle Rank - Broadcom (NASDAQ:AVGO), Amazon.com (NASDAQ:AMZN)

AI's value is shifting to application-layer innovation, benefiting Salesforce, Shopify, and CrowdStrike over legacy hardware players. JPMorgan analysts Claudia Hueston and Pedro Martins just dropped a major AI ripple effect report, and the verdict is clear: DeepSeek's latest LLM is shaking up the tech hierarchy. With the promise of slashing training and inference costs, some companies stand to gain big, while others might be in for a rough ride. Winners: The AI Powerhouses The bullish camp -- tagged under JPMorgan's DeepSeek Positive Impact -- is a who's who of AI titans and cloud leaders. Alphabet Inc GOOGL GOOG, Amazon.com Inc AMZN and Nvidia Corp NVDA top the list, unsurprisingly, given their AI ambitions. But the wave also lifts Broadcom Inc AVGO, Marvell Technology Inc MRVL and Micron Technology Inc MU -- all crucial to AI infrastructure. Even software players like Snowflake Inc SNOW, Databricks rival Confluent Inc CFLT and GitLab Inc GTLB look poised to benefit from AI-powered cost efficiencies. The key theme? AI is moving from experimental to execution mode, and companies that enable inferencing and data management stand to gain. Read Also: Sundar Pichai Downplays DeepSeek Threat -- Google's Gemini Still Leads In Cost, Performance, And Latency Losers: The Hardware Setback On the flip side, JPMorgan's DeepSeek Negative Impact list puts companies like Intel Corp INTC and Oracle Corp ORCL in the danger zone. With cheaper and more efficient AI models, legacy hardware players could see slower demand for expensive, high-power training chips. Even industrial giants like Caterpillar Inc CAT and Cummins Inc CMI might take a hit if AI-driven automation undercuts traditional heavy machinery investments. The Takeaway: AI's Next Economic Shift While hyperscalers are still throwing money at AI hardware, DeepSeek's disruption could eventually tilt the value proposition toward application-layer innovation. Companies that enable seamless AI adoption -- think Salesforce Inc CRM, Shopify Inc SHOP and CrowdStrike Holdings Inc CRWD -- could see an acceleration in demand, while those overly reliant on expensive, legacy infrastructure may need a strategy refresh. Read Next: AMD CEO Lisa Su On DeepSeek's AI Disruption: 'Training And Inference With Less Infrastructure Is A Good Thing' -- But GPUs, Not ASICs, Will Still Power The Future Of AI Chips Image: Shutterstock AMZNAmazon.com Inc$238.59-1.43%Overview Rating:Good62.5%Technicals Analysis1000100Financials Analysis400100WatchlistOverviewAVGOBroadcom Inc$232.524.54%CATCaterpillar Inc$363.200.35%CFLTConfluent Inc$28.94-0.79%CMICummins Inc$362.60-0.25%CRMSalesforce Inc$343.99-0.04%CRWDCrowdStrike Holdings Inc$408.190.16%GOOGAlphabet Inc$192.90-7.13%GOOGLAlphabet Inc$190.81-7.54%GTLBGitLab Inc$71.460.03%INTCIntel Corp$19.27-0.10%MRVLMarvell Technology Inc$111.701.83%MUMicron Technology Inc$90.31-0.39%NVDANVIDIA Corp$120.421.49%ORCLOracle Corp$167.88-0.01%SHOPShopify Inc$118.50-0.59%SNOWSnowflake Inc$186.90-1.17%Market News and Data brought to you by Benzinga APIs