In an era where technology is advancing at an unprecedented pace, breakthroughs in the field of artificial intelligence (AI) continually capture global attention. The launch of DeepSeek, a domestic AI model in early 2025, resonated like a seismic event across the world of capital markets and technology, creating promising new opportunities for China’s AI industry while driving transformative changes across the global AI landscape.

First, DeepSeek's Technological Advantages Stand Out

(i) Efficient Algorithms with Low Computational Demands

DeepSeek has ingeniously introduced a dynamic neuron activation mechanism, a crucial innovation. During the inference stage, it activates only 5% to 15% of the neural network parameters, leading to an 80% reduction in computational requirements compared to traditional dense models. The processing throughput increases threefold per unit computational power. This capability ensures robust performance even in resource-constrained environments, laying a solid foundation for large-scale applications.

(ii) Low-Cost, High-Performance

In terms of training costs, DeepSeek's advantage is unparalleled. For instance, the total training cost of DeepSeek-V3 is merely $5.576 million, which is about one-tenth of that for international models. By utilizing mixed precision quantization technology, it achieves an impressive 97% accuracy while reducing the model size to a quarter of its original volume, cutting deployment costs by 60% for edge devices. Consequently, this alleviates the financial burden on companies significantly.

(iii) Multimodal Learning and Cross-Scenario Adaptability

DeepSeek is not limited to a single task; it excels in voice, image, and text processing, and possesses multitasking capabilities to tackle complex cross-disciplinary challenges in various application scenarios. In benchmark tests like MMLU and mathematics competitions, it even outperformed top models such as OpenAI's GPT-4 and Claude-3.5-Sonnet.

(iv) Open Source and Community Support

Embracing an open-source philosophy, DeepSeek attracts numerous developers and enterprises to engage in AI development and applications through community support, injecting vitality into its growth and promoting rapid advancements in domestic AI technology.

Second, DeepSeek's Breakthroughs Carry Profound Implications

For a long time, Europe and America maintained dominance in the AI sector, bolstered by substantial computational power and resources, a situation that became more pronounced following the emergence of ChatGPT. However, the high costs of computational power and the monopolization of GPUs have profoundly hampered global AI development, particularly stifling innovation applications in small and medium enterprises.

Chinese AI companies, facing difficulties in accessing high-performance GPUs, have charted new paths through innovation. The success of DeepSeek has broken through barriers by optimizing algorithms to improve efficiency while reducing the complexity of model training. This not only elevates China's AI technology to global recognition but also enhances its competitiveness in the AI space and dismantles the technological monopoly of Western powers, opening unprecedented opportunities for the domestic AI industry and downstream applications.

Third, Strong Reactions from Capital Markets

(i) A Surge in Tech Stocks

On the first trading day following DeepSeek's release, stocks within the technology sector in the A-share market witnessed substantial increases. Companies like Daily Interaction, Qingyun Technology, and Feilixin hit their trading limits, while related AI concept stocks spiked dramatically. The technology ETF in the Hong Kong market also demonstrated robust performance, with the Hong Kong Technology 30 ETF (513160) soaring by 10.04%, becoming a market leader and indicating strong confidence and interest in domestic AI technologies.

(ii) A Revaluation of Domestic AI Industry

Previously, exorbitant computational costs had led to low valuations for domestic AI companies, with most tech firms not surpassing a price-to-earnings ratio of 30. However, following the launch of DeepSeek, the advantages of domestic AI technology have become evident, prompting the capital markets to reassess the value of Chinese tech companies and setting the stage for potentially higher valuations in the future.

(iii) New Opportunities for Investors

At this moment, both Hong Kong and A-share markets have tech stocks positioned at historically low valuation levels. With stimulating capital market conditions, there is potential for valuation increases. Investors are encouraged to focus on firms within the AI industry known for their technological advantages and market prospects, as the industry remains in its nascent stages with immense investment potential.

Fourth, Conclusion

Driven by domestic initiatives like DeepSeek, AI technology is progressing at lightning speed, ushering the industry into a new golden era. The application scenarios for AI will continually expand, benefiting fields such as healthcare, finance, and intelligent manufacturing through transformative changes. Simultaneously, competition in the AI sector will intensify as companies from both domestic and international realms fiercely compete in technology research and development, market expansion, and capital positioning. For investors, although staying current with trends is essential, strategic investment portfolios and risk management can yield significant rewards in this burgeoning area.

The success of DeepSeek represents a critical breakthrough for China's AI industry and marks a significant shift in the competitive landscape of global AI technology. As AI technology continues to evolve, the future for the AI industry looks expansive. Both businesses and investors stand to gain substantially from this technological wave, with domestic AI technologies poised to shine brightly on the global stage.