In terms of technical path, DeepSeek-R1 abandons the traditional supervised fine-tuning path, and achieves performance comparable to that of OpenAI-o1 series models in inference tasks through the combination of reinforcement learning and cold-start data, providing a cost-effective option for the domestic AI industry.

DeepSeek and domestic computing power: forming a synergy to break the monopoly of overseas AI. DeepSeek has dramatically reduced the input/output pricing of inference models through algorithm innovation. In the short term, it strengthens the substitution logic of domestic training chips for overseas high-end training chips, and at the same time makes domestic chips more cost-effective on the inference side, opens up potential market space for domestic computing power chips, and accelerates their deployment and application on the training and inference side. Recently, the new DeepSeek series models were launched on Huawei's Ascend community. According to Huawei's official website, four Atlas 800I A2 (8 x 64 Gbit) servers are required to deploy the DeepSeek-V3 model. Domestically, JD Cloud, Tencent Cloud, Volcano Engine, Alibaba Cloud, etc. have also officially announced the launch of the DeepSeek model, and the utilization rate of domestic computing power is expected to increase. Overseas, technology giants such as Amazon, Microsoft, and Nvidia have also successively connected to DeepSeek-R1. From a long-term perspective, although DeepSeek reduces the deployment cost of a single model, the reduction in the cost of deploying large models is expected to attract more vendors' attention and use AI technology, AI applications are expected to be implemented on a large scale, the demand for inference computing power will increase significantly, and related vendors are expected to accelerate into the performance realization period.

In the domestic computing power industry chain, leading manufacturers in chips, servers, IDCs and cloud services are expected to fully benefit.

AI applications: Under the trend of AI inclusiveness, large-scale product implementation is expected. The open-source and low-cost nature of DeepSeek is expected to promote the popularization of AI technology and make AI applications more explosive. On February 10, 2025, Li Qiang presided over an executive meeting of the State Council to study the work related to boosting consumption. The meeting pointed out that it is necessary to strengthen the leadership of consumer brands, support the accelerated development of new consumption, promote "artificial intelligence + consumption", etc., and continue to create new consumer products, new scenarios and new hot spots. We believe that in this context, AI is expected to deeply empower traditional SaaS and IaaS business models, create product differentiators, and stimulate consumer willingness. At the same time, overseas, some AI application-related stocks have gradually cashed in performance, and the global AI application industry is expected to usher in a resonance period in the cutting-edge landing scenario of AI application.

Investment suggestion: We believe that DeepSeek will bring important model algorithm innovation, and the AI technology path is expected to shift from "computing power stacking" to "algorithm innovation", and its open-source, low-cost, and high-performance model will promote the inclusiveness of AI technology and the maturity of domestic supply chains, and the domestic AI industry is expected to form a resonance. In the future, China is expected to achieve a leap to become a "leader" in the field of AI, and the relevant links of the industrial chain may usher in a value revaluation. For the first time, it was given a "Recommended" rating to the TMT industry. It is recommended to pay attention to the domestic computing power link: Inspur Information (000977. SZ), Sugon (603019. SH), Digital China (000034. SZ), iSoftStone (301236. SZ）； AI Application Session: Kingsoft Office (688111. SH), iFLYTEK (002230.SZ), Keyuan Wisdom (002380.SZ), Hand Information (300170.HK) SZ), Dingjie Digital Intelligence (300378. SZ), Yonyou Network (600588. SH), Autel Technology (688208.SH), Color News Co., Ltd. (300634.SZ), EZVIZ Network (688475. SH), INTSIG (688615. SH), tax friends (603171. SH), Zhiyuan Internet (688369. SH), Venture Huikang (300451. SZ), ArcSoft Technology (688088. SH), Tors (300229. SZ）。

Risk warning: the risk of error in the cited data; AI investment is not as strong as expected; Increased competition for AI products; Focus on the company's performance not meeting expectations; The speed of policy standards is not as fast as expected; The risk of stock price correction caused by the short-term overvaluation of some companies.