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Jan. 29, 2025, 1:56 p.m.
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Market Panic as DeepSeek Unveils Cost-Effective Chatbot; Major AI Stocks to Consider

Brief news summary

On Monday, Wall Street experienced significant turmoil after the launch of a new chatbot by Chinese AI company DeepSeek, competing with OpenAI but requiring less computational power. This development triggered a staggering 17% drop in Nvidia's stock, wiping out nearly $600 billion in market value, marking the largest single-day loss for any public company. As a result, the overall market shrank by around $1 trillion, raising concerns about a potential decline in demand for high-end AI chips. These sharp market shifts may indicate a misunderstanding of the rapidly evolving AI sector and its investment prospects. Long-term investors may identify favorable opportunities amidst the fallout from DeepSeek's innovations. To leverage this, I plan to diversify my investments into three promising AI companies: SoundHound AI, noted for its voice technology; Applied Digital, poised to address the increasing AI demand amid potential data center shortages; and Taiwan Semiconductor Manufacturing Company, crucial for advancing AI technology. This market volatility could create strategic entry points for investors looking for significant long-term gains.

On Monday, Wall Street experienced widespread panic when Chinese AI firm DeepSeek unveiled a chatbot competing with OpenAI’s, while consuming significantly less computational power. This revelation caused Nvidia shares to plunge 17%, erasing nearly $600 billion in market value — the largest single-day loss for a public company ever. Concerns quickly spread across the tech sector, resulting in a $1 trillion market decline as investors feared that future AI advancements might require fewer high-end chips. However, this reaction highlights a significant misunderstanding of AI’s intricate technological needs and large capital investments necessary for top-tier development. This market dip may actually provide an excellent buying opportunity for long-term investors. I intend to take advantage of this situation by increasing my investments in three prominent AI stocks. **Voice AI Leader at a Discount** The market crash adversely impacted SoundHound AI (SOUN), with its shares dropping 11. 2%. I see this as a promising entry point for this voice AI innovator. Unlike many large language models central to the current crisis, SoundHound's business model and technology are distinct. The company, armed with over 155 patents, allows businesses to create bespoke voice interfaces independent of major tech platforms. With revenue projected to nearly double by 2025, this pullback presents a chance to invest in a focused, growth-oriented AI player. **Paving AI's Future** The market turmoil also led to a 27. 7% drop in Applied Digital’s (APLD) stock.

This reaction overlooks the company’s vital role in the AI infrastructure sector, particularly in developing next-gen data centers to power the AI revolution. With analysts projecting a significant power shortfall for U. S. data centers by 2028, Applied Digital is well-positioned with $5 billion in funding and partnerships with Nvidia, making it a strategic investment regardless of prevailing AI model trends. **Essential Chip Manufacturer** Taiwan Semiconductor Manufacturing Company (TSM) saw its shares fall 13. 3% as well, reflecting a narrow focus on immediate AI chip demands. As a leading semiconductor foundry, TSMC serves major clients like Apple and AMD, and its relevance transcends temporary tech trends. With a 65% market share in global foundry revenue, TSMC’s expertise in advanced manufacturing remains crucial to AI growth and broader tech innovation. This recent drop offers a rare chance to invest in a foundational player at an attractive valuation. **Attractive Buying Opportunity** The Monday sell-off has created favorable entry points in the tech sector. While many remain anxious over computational efficiency, I am concentrating on firms that provide unique value within the AI ecosystem: SoundHound for voice AI, Applied Digital for essential power infrastructure, and Taiwan Semiconductor for critical manufacturing. These companies embody different aspects of the AI revolution, and their current valuations present a compelling opportunity for investors who look beyond temporary market fears, which often arise from fundamental misunderstandings of industry dynamics.


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