At the start of this week, Wall Street was concerned about a new, super-cheap AI model from China dubbed DeepSeek upending long-term spending plans on AI infrastructure.
By the end of the week, investors had seemingly forgotten all about the “DeepSeek scare.” A wave of strong tech earnings put those fears to rest.
And rightfully so.
Forget DeepSeek: The strong tech earnings reports released this week prove that AI stocks will keep charging higher for the foreseeable future.
DeepSeek’s Impact: A Catalyst for AI Growth
The big fear at the start of the week was that DeepSeek—a Chinese AI model that rivals top U.S. AI models but supposedly costs about 95% less to make—would kill the AI spending boom by showing the world there’s a cheaper way to build AI.
But the world’s biggest and most important AI companies don’t see it that way.
Giant semiconductor equipment supplier ASML (ASML) reported earnings on Tuesday. In their quarterly conference call with analysts, ASML management said the cost efficiencies unlocked by DeepSeek would just open the door for more AI models to be created, which will lead to more AI chips, and more demand for the semiconductor equipment needed to make those chips.
They see the DeepSeek breakthrough only boosting the AI spending boom.
Microsoft (MSFT) and Meta (META) seem to agree.
They both reported earnings on Wednesday. In their quarterly conference calls, both Microsoft and Meta executives said the DeepSeek breakthrough would not change their AI spending plans. Both companies doubled down on their plans to spend tens of billions of dollars in 2025 on creating new AI infrastructure.
CEO Satya Nadella even invoked Jevons Paradox—an economic principle which states that if you decrease the cost of a high-demand resource (in this case, AI), you actually increase the demand for it. By that logic, Nadella seems to think the same thing that ASML’s executives think—the DeepSeek breakthrough will only boost the AI spending boom.
Semiconductor firm KLA Corporation (KLAC) said much of the same in their quarterly earnings call this week. They believe that the increased compute efficiency unlocked by DeepSeek will enable more adoption of AI due to “clearly elastic” demand for AI. Another important player in the AI infrastructure world, Celestica (CLS), echoed similar thoughts. More efficient compute means more apps, which means more demand for the stuff that builds those apps.
The tech world has spoken. DeepSeek’s compute efficiency breakthroughs will be a net positive for the AI industry.
That means Wall Street got it wrong earlier this week. When Nvidia (NVDA) collapsed almost 20% in a day on Monday, that was an overreaction.
That was a buying opportunity.
But it wasn’t the only buying opportunity in the market. The DeepSeek drama this week created a plethora of compelling buying opportunities on Wall Street. This is the time to look for those opportunities.
The Final Word
To help us find a few, we’re turning our attention to the world’s richest man, Elon Musk, and his AI startup, xAI. We think that startup has a lot of potential over the next few years, but it isn’t a public company. So how do you claim your share?
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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