Jefferies says DeepSeek part of ‘ongoing evolution, not revolution’

Jefferies views DeepSeek’s launch “as part of an ongoing evolution, not revolution,” and thinks software market selloff is largely overdone. Innovations which continue to drive increasing efficiency at inference, but also training, will further improve the return on investment of artificial intelligence, leading to faster software adoption, the analyst tells investors in a research note. Jefferies maintains its existing theses owning Microsoft (MSFT) and Amazon.com (AMZN) for enterprise, Meta Platforms (META) and Alphabet (GOOGL) for consumer, and Snowflake (SNOW) for a potential data and AI “breakout play.” In addition, observability names like Dynatrace (DT) and Datadog (DDOG) should see broader adoption with the proliferation of AI, says the firm. It also believes the market is overreacting to Oracle (ORCL), with stock down 14% yesterday, saying core AI capacity demand has not changed. Inference efficiency is part of an ongoing trend with DeepSeek and not as incremental as some lead to believe, according to Jefferies.