0745 GMT - China's DeepSeek-driven software stocks rally could have more momentum than the ChatGPT-induced sector rally in December 2022, Jefferies analysts say in a research note. As a local, low-cost and open-source model, DeepSeek could be valuable for Chinese software companies looking to commercialize AI, the analysts add. Additionally, China's macroeconomic conditions now are likely more favorable than during the previous AI-driven rally, which occurred just after the country emerged from Covid lockdowns, the analysts note. However, Jefferies highlights the weak downstream demand, particularly from government and certain state-owned enterprises, as a key risk. Furthermore, AI monetization could be at least a year away, as companies are still in the early stages of development. Jefferies' top picks in this sector are Kingdee and Supcon. (sherry.qin@wsj.com)
(END) Dow Jones Newswires
February 17, 2025 02:46 ET (07:46 GMT)
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