DeepSeek Disrupts Global Markets: Stocks to Watch Amid the Recent Tech Shake-Up

The rise of DeepSeek, a Chinese AI company, has created a stir in the Aussie market, particularly within the tech sector. Known for its AI breakthroughs, DeepSeek’s rapid success has sparked both excitement and concern among investors, leading to a sell-off in tech stocks. This article dives into how DeepSeek’s innovations have impacted the ASX, causing a ripple effect across global markets and prompting questions about the future of traditional AI infrastructure. We’ll explore the market’s reaction, sector performance, and the potential long-term implications for Aussie stocks, all while highlighting a few standout companies in key commodity sectors. What Happened on the ASX? Market Reaction: On January 28, 2025, we saw a slight drop on the ASX 200. A lot of that decline can be traced back to concerns about DeepSeek and its AI capabilities. There’s a real fear that the company’s success could reduce the demand for traditional AI services and the infrastructure that supports them. Sector Performance: The market didn’t look great that day, with six of the eleven sectors finishing lower. Tech stocks and data centre stocks were hit particularly hard. NextDC dropped 6.6%, Goodman Group fell by 6.5%, and Nuix saw a notable drop of 15.4%. Market participants are worried that DeepSeek’s more efficient AI could shake up the market and make current AI technologies less valuable. Why Did This Happen? DeepSeek recently launched its AI assistant, which quickly became the most downloaded app in the U.S., even beating out big players like ChatGPT. What really got people talking is that DeepSeek claims it can offer similar, or even better performance at a tiny fraction of the cost, just $5.5 million to train its models, compared to over $100 million for competitors like OpenAI, Google, or Meta. Naturally, that’s causing some nervousness in the market. The concern about DeepSeek’s potential also spread to U.S. tech stocks, particularly Nvidia. The company experienced a historic drop in market cap as fears grew that DeepSeek’s progress could reduce the need for high-end chips used in AI. This U.S. downturn had a ripple effect on global markets, including ours. The market is still trying to figure out the long-term implications of DeepSeek’s AI model. The changes it could bring to the tech supply chain, from chipmakers to data centres, are still unclear. While the current market reaction is mostly negative, we think the true valuation of these stocks may not yet be fully reflected in the current market moves. What Does This All Mean for Aussie stocks? So, what does this all mean for the ASX 200? While the emergence of DeepSeek has certainly caused a stir, the overall impact on the ASX has been surprisingly limited so far. One of the reasons we haven’t seen a bigger drop is that the ASX 200 has fewer tech stocks compared to global indices. So, despite some significant drops in specific stocks, the index only dropped by 0.12%. This shows that, even though some sectors were hit hard, the broader market wasn’t as affected. It wasn’t all bad news on the ASX. Sectors like Consumer Discretionary and Financials performed well, helping to offset the losses in tech and data centre stocks. For instance, DigiCo Infrastructure REIT saw an 11% drop due to fears around DeepSeek, but strong performances from banks and consumer-focused companies helped the market stay relatively stable. While there’s a lot of talk about the potential risks of cheaper AI models, we believe that the long-term demand for data centres may not take as big of a hit as some fear. In fact, while cheaper AI could be a risk, demand for data centres in the short term is likely to stay strong. This more cautious outlook has helped keep the market from overreacting. Despite the turmoil in the U.S., the ASX has been relatively resilient. The Aussie market hasn’t mirrored the steep losses seen on Wall Street, and by January 29, 2025, we actually saw the ASX showing signs of recovery, up from the initial declines related to DeepSeek. All in all, while DeepSeek’s announcement has certainly caused some volatility in specific sectors, we think the overall impact on the ASX 200 has been pretty contained. This is thanks to the index’s lower exposure to tech stocks, the resilience of other industries. We’ll be keeping a close eye on how things develop, but for now, the market is holding up better than some might have expected. Meanwhile, a handful of stocks are making waves, showing strong momentum and solid performance across key commodity sectors. Whether it’s uranium, coal, gold, or lithium, these companies are standing out early in the year. Let’s take a closer look at five stocks worth keeping an eye on. Boss Energy (ASX: BOE) – Uranium Play Gaining Momentum (Up 25% YTD) Boss Energy (ASX: BOE) is off to a strong start this year, thanks to a big jump in uranium production. The company reported a 96% increase in ion exchange (IX) plant production, with 137,084 pounds of triuranium octoxide (U₃O₈) produced and 215,319 pounds in the IX process. The Honeymoon project remains on track to hit FY25 production guidance of 850,000 pounds of U₃O₈, which is a big deal as nuclear energy demand picks up globally. Boss also locked in sales of 200,000 pounds at solid realized prices, benefiting from the strong uranium market. With nuclear power back in focus as a clean energy source, uranium miners like Boss Energy are in a great spot. The stock is already up 25% year-to-date, and if uranium prices hold up, there could be more upside ahead. Whitehaven Coal (ASX: WHC) – Strong Demand, Solid Upside (Upside Potential: +23%) Whitehaven Coal (ASX: WHC) had a strong December quarter, reporting a sharp rise in sales while keeping its production and cost guidance intact. The long-term outlook looks solid, with earnings projected to grow over 20% annually, thanks to steady demand from India and China. Financially, Whitehaven is in a sweet spot. A 10% bump in coal prices could lift pre-tax earnings by as much as 20%, highlighting how sensitive its bottom line is to market conditions. The company’s strong cash flow should continue to support earnings growth and dividends. Based on our valuation models, WHC has an upside potential of 23%, with a fair value estimate of $7.60 per share. While P/E, P/S, and P/B metrics suggest the stock is slightly overvalued, a discounted cash flow (DCF) analysis points to significant undervaluation. If coal demand remains robust, this could be one to watch closely. Perseus Mining (ASX: PRU) – Gold Output on the Rise (Up 56% Since Last Year) Gold miner Perseus Mining (ASX: PRU) continues to shine, with a 9% increase in production last quarter, hitting 132,419 ounces. The company has been dealing with higher costs tied to a major waste-stripping project at its Yaoure mine in Côte d’Ivoire, but overall, it remains within its production guidance. All-in sustaining costs (AISC) came in at $1,127 per ounce for the quarter, which was actually lower than the previous period. However, the half-year AISC rose to $1,162 per ounce, reflecting some inflationary pressures. With gold prices holding steady, Perseus has maintained strong momentum, climbing 56% in the past year. If production continues at this pace and costs remain under control, the stock could have more room to run. Ramelius Resources (ASX: RMS) – Solid Gold Production (Up 10% YTD) Ramelius Resources (ASX: RMS) has been keeping things steady, reporting 85,311 ounces of gold production in the December quarter. The company is sticking to its full-year guidance of 270,000–300,000 ounces, with an AISC target of $1,500–$1,700 per ounce. While cost pressures are still a factor, Ramelius is managing operations well. The stock has climbed 10% year-to-date, and with gold demand remaining strong, it could stay on investors’ radars. Pilbara Minerals (ASX: PLS) – Lithium Giant in Transition (Up 7.2% YTD) Pilbara Minerals (ASX: PLS) hit a speed bump in the December quarter as it transitioned to a new operating model. Spodumene concentrate production dipped to 188,200 dry metric tonnes, down from 220,100 in the previous quarter. Despite the production drop, Pilbara remains a dominant player in the lithium space, which continues to see ups and downs. The company’s ability to adjust and improve efficiency will be key to how it performs moving forward. So far, the stock is up 7.2% year-to-date, and if lithium demand stays strong, there could be more upside.