ASML (AMS: ASML) chief executive Christophe Fouquet remains bullish as ever on AI spending even after DeepSeek launched a new model that rivals OpenAI in performance but costs only a fraction.
Fouquet is convinced that lower-cost models will only serve as a tailwind for global chip sales over the long term – because cheaper AI “means more applications [and] more applications mean more demand.”
ASML shares jumped as much as 10% this morning after the company reported strong results for its fourth financial quarter.
ASML ended 2024 with a strong backlog
Investors bailed on AI stocks this week after DeepSeek’s claim questioned if billions of dollars worth of investments are indeed required to build and operate powerful assistants.
But ASML boss Christophe Fouquet continues to see lower-cost AI models as an opportunity for the global chipmakers.
“We believe anything that will go in the direction of lowering cost on AI is [good news] because this will allow applications to go to many, many more devices,” he said in a CNBC interview today.
ASML ended last year with well over $37 billion of order backlog that further bolstered the narrative that concerns of a slowdown in AI spending due to DeepSeek’s new offering are perhaps significantly overblown.
DeepSeek may not be a threat for hyperscalers either
DeepSeek has enjoyed spotlight in the financial markets in recent days, but none of the company’s customers have so much as questioned what its “R1” means for ASML so far, Fouquet added.
He even went on to question how a lower-cost AI model could prove to be a negative even for the hyperscalers.
“For hyperscaler, the capital expenditure is today spent for investment. They’re investing heavily in research and development [R&D]. They continue to want to do that,” the chief executive noted.
Plus, the US hyperscalers’ access to the most sophisticated Nvidia chips gives them an edge they could leverage to build even more powerful AI models moving forward.
On top of continued AI tailwinds, a 0.9% dividend yield makes ASML shares even more attractive to own at writing as well.
DeepSeek may struggle to grow its market presence
In related development, the US Navy banned DeepSeek, citing national security concerns on Wednesday, setting a precedent for countries that have strategic alliances with the United States.
Historically, the likes Japan and Australia have taken a similar stance on matters related to the national security.
For example, they followed the US in announcing a ban on Chinese giant Huawei in 2018.
So, if the US and then its allies decide in favour of imposing a broader ban on DeepSeek, the startup could struggle to expand its market presence in the first place.
Note that President Donald Trump has already urged his country’s tech executives to focus on innovation to stay ahead of the global competition.
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