Wall Street spiraled into panic mode Monday when Chinese artificial intelligence (AI) company DeepSeek unboxed a chatbot that reportedly matches OpenAI's capabilities, while requiring significantly less computational power. The news triggered a massive sell-off in Nvidia shares, which plunged 17% and erased nearly $600 billion in market value -- the largest single-day loss for any public company in history.
The contagion spread quickly through the tech sector. The broader market shed approximately $1 trillion in value as investors wrestled with fears that future AI development might require fewer premium chips than previously expected.
While dramatic, this fear-driven sell-off reveals a fundamental misunderstanding of the AI industry's complex technological and capital requirements. The market's knee-jerk reaction to DeepSeek's announcement overlooks critical realities about the massive infrastructure investments and technological sophistication required to compete at the highest levels of AI development. A closer examination suggests this pullback may present a compelling opportunity for long-term investors.
Image source: Getty Images.
I plan to use this opportunity to increase my positions in three leading AI stocks. Read on to learn more.
Voice AI leader at a discount
DeepSeek's announcement dragged SoundHound AI (SOUN -1.69%) shares down 11.2% on Monday, creating what I view as an attractive entry point for this voice AI pioneer. While the market lumped the stock in with the broader AI sell-off, the company's technology and business model fundamentally differ from the large language models (LLMs) at the center of the current controversy.
What particularly attracts me to SoundHound is its position as one of the few independent players in a market with significant barriers to entry. Protected by over 155 granted patents, the company's proprietary technology enables businesses to create custom voice interfaces without relying on big tech platforms like Alexa or Siri.
SoundHound's revenue is projected to nearly double in 2025. I believe the current pullback offers an opportunity to invest in a focused AI player with a clear growth path.
Building the foundation of AI's future
The DeepSeek-triggered market panic crushed Applied Digital's (APLD 2.61%) stock by 27.7% on Monday -- a classic case of Wall Street throwing out the baby with the bathwater. Unlike companies directly exposed to AI chip demand, Applied Digital is tackling a more fundamental challenge -- powering the AI revolution through next-generation data centers.
This is a pick-and-shovel play that's ahead of a critical industry bottleneck. Morgan Stanley projects a massive 36GW power shortfall for U.S. data centers by 2028, equivalent to 36 nuclear power plants.
With $5 billion in fresh Macquarie Asset Management funding and strategic partnerships with Nvidia, the company is positioned to benefit, regardless of which AI models ultimately win the race. I view this sell-off as a gift for patient investors.
The indispensable chip manufacturer
DeepSeek's announcement sent Taiwan Semiconductor Manufacturing Company's (TSM -0.04%) shares tumbling 13.3% Monday, demonstrating Wall Street's shortsighted focus on near-term AI chip demand. As the world's leading semiconductor foundry, TSMC produces chips for everyone from Apple to AMD, and the company's fortunes extend far beyond any single technological trend or customer.
What makes this pullback particularly compelling is Taiwan Semiconductor's irreplaceable position in global technology. With roughly 65% market share in global foundry revenue and unmatched expertise in advanced manufacturing processes, the company remains essential to both AI development and broader semiconductor innovation. Monday's discount offers a rare opportunity to invest in the backbone of modern technology at an attractive valuation.
A compelling buying opportunity
Monday's AI-triggered sell-off has created attractive entry points across different segments of the technology sector. While Wall Street panics about computational efficiency, I'm focused on companies that bring unique value to the AI ecosystem: SoundHound's specialized voice AI technology, Applied Digital's essential power infrastructure, and Taiwan Semiconductor's irreplaceable manufacturing capabilities.
These companies represent different approaches to the AI revolution, and I believe their current valuations offer compelling opportunities for investors willing to look past the market's temporary hysteria. After all, the best time to invest is often when others are fearful -- especially when that fear stems from a fundamental misunderstanding of the industry dynamics at play.
