Technology | AI Infrastructure & Adoption
The emergence of DeepSeek V3, a cost-effective AI model from a Chinese start-up, has sent ripples across global markets.1 This development is more than just a headline - DeepSeek signals a critical transition in AI, as the focus shifts from hardware-heavy investments to cost-efficient platforms, infrastructure, and adoption.2 While its implications are complex, one thing is clear - the next chapter of AI is unfolding.
Why DeepSeek Matters
DeepSeek V3 showcases how innovation can flourish even under resource constraints. By leveraging open-source architectures and advanced training techniques, the model achieves performance comparable to industry leaders like OpenAI and Meta at a fraction of the cost.3 Its training cost is estimated at just US$5.6 million, compared to the US$50+ million often required by its competitors.4 This efficiency has disrupted traditional assumptions about the AI development cycle, raising questions about the sustainability of current high-capex strategies.
Winners and Losers
The market reaction highlights emerging winners and losers. Chinese tech giants like Alibaba and Tencent have rallied as investors embrace the potential of cost-efficient AI models.5 Cloud service providers and software companies also stand to benefit as the AI focus shifts to scalable, adoption-driven solutions.6 Meanwhile, hardware-reliant players such as Nvidia and TSMC face near-term challenges, with reduced demand for high-end GPUs likely to weigh on valuations.7
Market Implications
DeepSeek's advancements reflect a broader trend: AI's evolution is circular, not linear. While the current disruption may create headwinds for hardware providers, it also underscores the growing importance of infrastructure, platforms, and software as critical enablers of cost-efficient AI adoption.8 Adjacent segments like software and cybersecurity stand to benefit as businesses seek scalable and secure solutions.9 Additionally, the rise of Chinese AI players highlights the growing need for global diversification as markets increasingly shift beyond traditional US-centric ecosystems.10
Looking Ahead
DeepSeek is a wake-up call, not a collapse. It accelerates AI's shift from intensive hardware investments to cost-efficient enablers and adopters. While the near-term outlook for semiconductors remains uncertain, the long-term demand for robust AI infrastructure spanning data centres, energy solutions, and raw materials remains intact. As AI adoption broadens, investment areas focused on infrastructure and scalable solutions are poised to benefit.
Explore Artificial Intelligence with GXAI.
Looking for more ETF Express? Check out this week's Market Moves and Commodity Calls.
Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as atВ 29/01/2025. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.
Brokerage commissions will reduce returns.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.
