Monday’s DeepSeek sell-off may have rattled investors who picked up shares of a top semiconductor play at any time over the past few weeks. Undoubtedly, it’s not hard to imagine many new retail investors panicking in the face of Nvidia (NASDAQ:NVDA) stock’s sudden double-digit percentage decline.

Though China’s DeepSeek, which recently pulled the curtain on a profoundly impressive AI model that uses an advanced optimization technique to deliver nearly unfathomably efficiency gains, may signal that sophisticated language models are heading towards the edge (physical devices), one must remember that cheaper, more-efficient models could act as a massive boon for demand. 

Indeed, perhaps Microsoft (NASDAQ:MSFT) CEO Satya Nadella put it best when he brought up Jevons paradox—an economic theory that suggests greater efficiency begets greater demand—to describe the current state of AI. Indeed, I’ve remarked on AI efficiencies as being a more meaningful needle-mover for this new year. With DeepSeek’s impact on the AI scene, the next lowest-hanging fruit may very well lie in efficiency.

DeepSeek sell-off rocks markets. It’s a boon for the AI boom.

Though investors may be quick to sell AI stocks in the heat of the panic, I’d argue that DeepSeek is a massively bullish development on the front of AI. DeepSeek’s breakthrough model suggests investors should look beyond the Magnificent Seven as smaller teams with the ambition and ability to think outside of the box aim to tackle AI problems from vastly different angles with efficiency at the front of mind.

Indeed, a small startup can’t commit tens of billions to an unproven effort! While the Magnificent Seven may have more competition, I do think that they’re on notice. Dollar amounts spent on AI do not tell the full story.

If DeepSeek can spend just a few million to do what would have cost other firms billions, you can bet that the Mag Seven firms will be more deliberate about how they spend. Now, that doesn’t mean they’ll suddenly go back on their 2025 AI spending plans, but it does perhaps entail potential adjustments to the downside should evidence suggest stockpiling GPUs isn’t necessary to deliver future AI breakthroughs.

Here are two oversold Mag Seven stocks that I think look that much more attractive after DeepSeek’s impact:

Nvidia

Nvidia took one to the chin as shares shed as much as 18% in response to the DeepSeek breakthrough. With Nvidia stock attempting to climb back from its steep plunge into bear market territory, dip-buyers may wish to consider punching their tickets sooner rather than later. After all, Nvidia stock does not tend to stay down for very long after taking a big hit to the chin.

While AI’s move towards the edge (our own devices) may entail less need for AI cloud computing, I do think that the lower cost of AI computing could open the floodgates to usage. Indeed, perhaps higher demand for AI products could partially offset any dent in demand for the priciest of AI chips as more firms aim to prioritize ROI over having the very best hardware. Additionally, higher demand for more affordable AI could give Nvidia’s robotics business a huge shot in the arm.

The DeepSeek breakthrough shows us that you can do a lot of incredible things without having a stockpile of H100 chips. In any case, I believe that the most powerful AI chips can really help firms accelerate AI model efficiency gains. Remember, Nvidia isn’t just a hardware firm; it has the software and tools that provide immense value. So, if you were waiting and wishing for a big dip to buy NVDA shares, now may be the time to act.

Apple

Apple (NASDAQ:AAPL) stock actually gained on the back of the DeepSeek sell-off, now up around 7% on the week. Indeed, perhaps Apple had the best AI strategy of the Mag Seven all along. Though it’s still incredibly secretive with its plans and figures it intends to spend on the effort, one can’t ignore the recent open-source contributions it’s made in the realm of AI.

Whether we’re talking about OpenELM, which is a family of efficient language models, or its recent acquisition of efficiency-focused AI startups, it’s clear Apple has an opportunity on its hands as it looks to become an innovator in the realm of edge AI. In terms of capital-light AI plans, it’s tough to top Apple in the Mag Seven.

In light of the DeepSeek shift to greater AI efficiencies, I’d not be surprised if Apple were to make a move to all-time highs, even if coming earnings aren’t the best in the world. Given the wave of recent analyst downgrades, the bar is low ahead of earnings.—perhaps Apple has a free pass this time around. In any case, look for Apple stock to command an AI multiple as we head into the second half, especially if WWDC 2025 and the coming iOS 18.4, which includes updates to Apple Intelligence, impress.

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