Semiconductor capital equipment companies, or semicaps, such as Applied Materials (AMAT), KLA (KLAC), and Lam Research (LRCX), could benefit from the emergence of Chinese artificial-intelligence startup DeepSeek, Oppenheimer said Monday.
"We see Deepseek as counterintuitively a long-term demand positive for semicaps," the firm said in a note, noting that the open-source Chinese AI model will spur a reduction in the cost of artificial intelligence adoption at the large language model and application layers.
Deepseek is outperforming Microsoft-backed (MSFT) OpenAI's model at a much lower cost, Oppenheimer said.
"Semicaps remain agnostic, supplying critical tools to all players, ensuring they benefit from the broader AI expansion," the firm said. The emergence of Deepseek is also seen "expanding the pool of economical buyers at the infrastructure layer beyond megacap hyperscalers," while accelerating competitive pressures in generative AI, thus driving increased investment, Oppenheimer said.
Shares of Applied Materials were down 7.5% in recent trading amid the broader tech selloff in the wake of the launch of the DeepSeek AI assistant. KLA fell more than 6%, while Lam Research shed nearly 6%. Microsoft shares were down almost 4%.
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