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DeepSeek damage control

AI investing isn't over. In fact, this selloff is a great opportunity to buy stocks for cheap.

DeepSeek AI on a phone

Patrick Pleul/Getty Images

3 min read

If you were anywhere near Wall Street yesterday you may have felt a great disturbance in the Force, as if millions of traders suddenly cried out in terror as nearly $1 trillion in market value was wiped out in a single day.

The culprit? China’s latest breakout AI startup DeepSeek, which produced a smarter version of ChatGPT for a fraction of what US companies have been spending to train their models.

But now that we’re 24 hours out from DeepSeek-gate, it’s clear that the damage didn’t hit all stocks as hard as some feared. In fact, most of the losses were concentrated in the names tasked with building out the AI boom, rather than every single Silicon Valley power player.

For example, Meta Platforms, Amazon, and Apple actually ended yesterday in the green, while Microsoft, Tesla, and Alphabet’s single-digit losses paled in comparison to Nvidia’s 17% drop.

The “picks and shovels” of the AI boom fell the hardest, given that DeepSeek appeared to skip those so-thought-necessary scaling steps altogether. For instance, although energy and utilities were some of the hottest sectors in the market last year based on AI power needs, energy producers such as Constellation Energy, Talen Energy, and Vistra tumbled sharply yesterday.

DeepSeeking some gains

In a moment like this, it can be hard to parse through all the headlines, conflicting opinions, and puns (🙋guilty).

But there’s a myriad of ways experts think you can use yesterday’s selloff to your advantage.

Bank of America analysts argue that DeepSeek’s success will ultimately be bullish for software. “DeepSeek’s innovative training and post-training techniques will likely be incorporated by competing frontier-model developers…Over the longer term, we expect advances at the model level to drive accelerated enterprise AI adoption and usage as chatbots, copilots and agents become simultaneously smarter and cheaper,” the analysts explained. BofA said that Microsoft, Salesforce, Adobe, Intuit, ServiceNow, and Hubspot are the bank’s “top large-cap picks with Agentic AI exposure.”

Making sense of market moves

Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.

​​Hightower’s chief investment strategist Stephanie Link highlighted Amazon and Broadcom as two companies that are tied to the AI infrastructure trade, but whose businesses are diversified enough to protect them from any serious damage.

Morningstar’s Brian Colello argued that DeepSeek didn’t necessarily lower his expectations for Nvidia, either. “We believe AI GPU demand still exceeds supply, so while slimmer models may enable greater development for the same number of chips, we still think tech firms will continue to buy all the GPUs they can as part of this AI ‘gold rush.’”

For those more savvy traders, JPMorgan analyst Bram Kaplan pointed to some options strategies to play the moment, including buying call spreads on several stocks with a February expiration, such as Vistra EMCOR Group, Vertiv, and many others.

The bottom line: Don’t freak out. There’s no need to go on a huge tech investing spree today if it doesn’t align with your long-term strategy. Then again, if you’re already bullish on Nvidia (or the rest of the AI trade), you may be getting a bargain right now.—LB

Making sense of market moves

Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.