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Broadcom Inc. (AVGO) Feeling the Heat from The DeepSeek AI Effect

We recently published a list of The DeepSeek AI Effect: 10 Stocks Feeling the Heat. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks feeling the heat from the DeepSeek AI effect.

Markets were in turmoil after Chinese startup DeepSeek introduced a low-cost AI model over the weekend. DeepSeek is set to disrupt the AI industry, having developed the technology using a fraction of the resources used by competitors in the US. It is a direct challenge to rivals like OpenAI, Google and Meta, whose valuations now come under scrutiny. DeepSeek also reduces the usage of chips and energy. Investors are now keen on understanding what a justified valuation of chip manufacturers would be after accounting for a more efficient technology that is expected to curb demand for huge data centers that run on extremely expensive chips. DeepSeek has already gained popularity since its launch, occupying a top position in the Apple Store.

The NASDAQ is down almost 3%, with cumulative losses for the top 10 losers reaching $965 billion. Chipmakers lost the most value followed by big tech companies. Even firms supplying electricity have been reeling after this announcement. Big players like Meta and Microsoft are monitoring the development closely and are expected to bring changes to their software after DeepSeek’s foray into AI.

READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article we have picked a list of 10 stocks that have witnessed the highest erosion in value due to the DeepSeek effect. With each stock we have mentioned the number of hedge fund investors. 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).

A technician working at a magnified microscope, developing a new integrated circuit.

Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Investors: 128

Broadcom Inc. (NASDAQ:AVGO), a leading chip manufacturer witnessed the second-largest loss in value after the share price dropped by 17%. Investors lost around $200 billion in this stock as chip stocks faced one of the highest impacts from the latest development.

Overall, AVGO ranks 2nd on our list of stocks feeling the heat from the DeepSeek AI effect. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that 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 AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.

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