We recently compiled a list of the 10 AI Stocks to Watch Amid the DeepSeek Buzz.In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other AI stocks.
US stocks plummeted on Monday following the news of a new artificial intelligence app from a Chinese startup, DeepSeek. Major chip firms were amongst the hardest hit in the AI frenzy, erasing more than a trillion dollars in market cap. The AI model by DeepSeek, developed with fewer chips and lower costs, has sparked fear on Wall Street after it was known to outperform OpenAI's ChatGPT on several benchmarks.
This frenzy was further fueled by the news that DeepSeek’s AI assistant app has become the most downloaded free app on the Apple store in the United States. Powered by DeepSeek-V3, DeepSeek's AI assistant has overtaken rival ChatGPT, the innovation by OpenAI that started the AI arms race in the first place.
Following the news of DeepSeek topping the charts, the Chinese startup said it will limit its registrations due to a cyber-attack. Before the attack, the company was also hit by a major outage on its website. According to the company’s status page, it had resolved issues relating to its application programming interface and users' inability to log in to the website. This outage was known to be its longest in 90 days.
While the AI world remains in a state of panic, analysts have been having differing views on the innovation. Some are worried about its impact, while others are taking it on a positive note. Wedbush, for one, isn’t worried about DeepSeek disrupting the planned $2 trillion in capital expenditures anticipated on AI in the coming years. They say that they “view the DeepSeek fear across the tech world as in essence a ‘tech AI head fake’ that will be short-lived.
“DeepSeek created an awesome LLM model (and credit to its software developers) however this Chinese AI small lab/LLM model is not bringing down the entire US tech ecosystem with it”.
Raymond James believes that these AI innovations can reshape the tech world, lowering costs significantly and reducing the need for massive GPU/XPU clusters at US hyperscalers.
“If DeepSeek’s innovations are adopted broadly, an argument can be made that model training costs could come down significantly even at U.S. hyperscalers, potentially raising questions about the need for 1-million XPU/GPU clusters as projected by some”.
In turn, Web3 entrepreneur Jeffrey Emanuel is saying that DeepSeek’s success “suggests the entire industry has been massively over-provisioning compute resources”.
Then there are also some experts, such as one Oxford professor, who is advising against putting private data on the DeepSeek platform in case it could be shared with the Chinese state.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Tesla, Inc. (TSLA) the Best Stock to Buy for High Returns in 2025?
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On January 27, Piper Sandler analyst Alexander Potter stated that their firm doesn’t believe that DeepSeek “represents a threat to the thesis”. The firm has been receiving several emails regarding the implications of the Chinese models on Tesla, hence the response. The lesson to be learned here is that it is possible for AI models to be trained using smaller-than-expected capex outlays. That being said, Tesla “may actually benefit from this trend,” considering how it is a GPU consumer and a capital spender. Tesla’s real advantage stems from its fleet of vehicles that have been purpose-built to collect self-driving data rather than its capex budget. The firm maintained its Overweight rating and $500 price target on Tesla shares.
Overall TSLA ranks 5th on our list of the AI stocks to watch amid the DeepSeek buzz. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
