DeepSeek sent ripples across the stock market this week – wiping $600bn off Nvidia’s market value. The model was trained on a budget of around $6 million. The low cost, coupled with the fact that the model is open sourced means that mainstream AI companies will tap into the potential that this offers.
The future remains uncertain. However, the development of DeepSeek means that costs for developing such AI models can be drastically reduced. Whilst this is good for companies and consumers because of lower costs, semiconductor companies may see a drop in their margins.
Why ASML is a good bet?
ASML is a world leader in supplying DUV lithography systems which etch circuit patterns onto silicon wafers, creating the chips that are heavily demanded by AI applications. After the unveiling of DeepSeek, the CEO of ASML came out and said “A lower cost of AI could mean more applications. More applications mean more demand over time. We see that as an opportunity for more chip demand.”
As demand for chips increases, ASML will benefit significantly as they are the only suppliers of the machines that are able to build these chips. The company has shown excellent Q4 results – revenue growing by 28% and 2025 outlooks are looking promising. The company currently has an average price target of $926.
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