DeepSeek's Free AI Assistant Disrupts Tech Stocks and AI Market

Best Tech Stocks to Watch in February 2025

Zaw Thiha Tun is currently an investment advisor for PI Financial Corp. He is also a financial writer on a wide variety of topics. The first month of January saw a rout in tech stocks, with the Technology Select Sector SPDR Fund (XLK) down 2% year-to-date. Investors were caught off guard on Jan. 27 by the launch of a new free AI assistant from the Chinese startup DeepSeek. The model demonstrated logic and reasoning capabilities on par with market leader ChatGPT, at a fraction of the training and development cost. Nvidia Corp (NVDA) was hit particularly hard, shedding nearly $600 billion in market cap amid reports that DeepSeek's model required significantly less graphical processing power to train. While the full impact of the tech sector's sell-off remains uncertain, it's clear the AI landscape has been disrupted by DeepSeek's entry. Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing. Investors often use price-to-earnings (P/E) ratio, looking for stocks with a low P/E ratio to uncover value. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts. However, bargain hunters must exercise patience, as it may take multiple quarters (or years) before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a "value trap," continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value opportunity.

Best AI Stocks to Watch in February 2025

Zaw Thiha Tun is currently an investment advisor for PI Financial Corp. He is also a financial writer on a wide variety of topics. Artificial intelligence (AI) bulls were caught off guard in January when Chinese startup DeepSeek launched a free AI assistant that quickly disrupted the market. The model showcased logic and reasoning capabilities comparable to ChatGPT but was developed at a fraction of the cost. Shortly after its debut, DeepSeek overtook OpenAI's ChatGPT as the top app on Apple's App Store, sparking concerns about OpenAI's dominance. Its unexpected rise came on the heels of a high-profile announcement by President Trump, outlining a $500 billion dollar joint venture between OpenAI, SoftBank, Oracle (ORCL), and MGX, to bolster U.S. AI infrastructure and promote American leadership in the sector. It remains to be seen how the AI race will play out, but 2025 is shaping up to be a pivotal year for groundbreaking developments. Below is an analysis of the top AI stocks for February 2025, screened for best value, fastest growth, and most momentum. Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing and the stock price will rise. Investors often use price-to-earnings (P/E) ratio to find stocks that are undervalued, as a lower P/E ratio can indicate that a company is valued at less than its fundamental value. However, it may take multiple quarters or years before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a "value trap," continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value opportunity.