In the fast-paced world of technology, where innovation can disrupt markets in mere seconds, a new player has sent shockwaves through the AI sector. DeepSeek, a Chinese AI startup, has claimed to develop a sophisticated AI model for a fraction of the cost typically associated with such ventures, causing a significant sell-off in tech stocks, particularly hitting Nvidia hard. However, according to Wedbush’s Dan Ives, this panic might just be the golden opportunity investors have been waiting for.

The DeepSeek Phenomenon

DeepSeek’s announcement that it built its AI model for less than $6 million, a stark contrast to the billions U.S. companies invest, has led to what many are calling a “panic” in the market. Nvidia, a company at the epicenter of this storm, saw its market cap plummet, losing more than the total value of companies like ExxonMobil. The sell-off was fueled by concerns over the sustainability of AI investments, especially when a startup from China appears to have achieved comparable results with significantly less investment.

Expert Insights

On “Power Lunch,” Dan Ives, Wedbush’s Global Head of Technology Research, alongside Nancy Tengler, CEO and CIO at Laffer Tengler Investments, offered their take on this market upheaval. “I think this is a top three buying opportunity that I’ve seen in the last decade for tech,” Ives stated, emphasizing his conversations over the weekend with tech executives and CIOs. “In no way does this change their sort of plans for these AI arms races or use cases,” he added, suggesting that the panic is overblown.

Ives pointed out that despite the doubts, Nvidia remains indispensable. “There is one GPU that’s fueling AI, and it’s Nvidia. When you think about these build-outs, when we talk about the enterprise, the $2 trillion of AI CapEx in the next three years, that doesn’t change from DeepSeek,” he explained. This perspective positions Nvidia not as a casualty but as the backbone of the AI revolution, potentially undervalued at this moment.

The Broader Market Impact

While Nvidia bore the brunt of the sell-off, not all tech stocks reacted equally. Ives highlighted, “Not all of the companies at the center of the sell-off today are necessarily affected the same way.” He sees this as an opportunity across the board for tech investments, particularly in software companies that could benefit from lower AI inference costs. “Names like Palantir, the hyperscalers, I could argue with inferencing, if you actually think costs are coming down, it’s actually bullish for even some of the software players like Salesforce, ServiceNow, Oracle, and others,” Ives elaborated.

Navigating the Hype vs. Reality

The skepticism around DeepSeek’s claims is palpable, with Scale AI CEO Alexandr Wang noting from Davos, “My understanding is that DeepSeek has about 50,000 A100s, which they can’t talk about, obviously, because it is against the export controls.” This raises questions about the true cost and capabilities of DeepSeek’s technology, suggesting the market might have overreacted based on incomplete or speculative data.

Investment Strategy

Nancy Tengler, with her focus on investment strategy, echoed Ives’ sentiments on the sell-off being a buying opportunity. “These are the times you own these names,” she affirmed, highlighting the resilience of tech giants in adapting and leading technological innovation.

The Bubble Is Not Bursting

While the DeepSeek narrative has introduced a wave of uncertainty, the consensus among market analysts like Ives is clear: the sell-off represents a buying opportunity. Nvidia, with its pivotal role in AI hardware and other tech companies poised to leverage AI’s growth, is seen as undervalued in this dip. The AI industry’s trajectory might be questioned, but the underlying demand for advanced computing power remains. As the dust settles, investors might look back at this moment not as the beginning of an AI bubble burst but as the perfect entry point into the next phase of AI expansion.