AI Daily: Microsoft, OpenAI probe DeepSeek-linked group access to data

Trump officials reportedly weighing more curbs on Nvidia’s China sales

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

PROBE: Microsoft (MSFT) and OpenAI are investigating if data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to DeepSeek, Dina Bass and Shirin Ghaffary of Bloomberg reports. Microsoft’s security researchers last year observed individuals they believe may be linked to DeepSeek exfiltrating a large amount of data using the OpenAI application programming interface, people told Bloomberg. Such activity could violate OpenAI’s terms of service or indicate the group acted to remove OpenAI’s restrictions on how much data can be obtained, the sources added. Reference

AI TECHNOLOGY: When DeepSeek revealed that it created an AI system that could match leading AI products in the U.S., experts at Meta (META) viewed the breakthrough as vindication an earlier decision made by the company was the right call, Cade Metz and Mike Isaac of The New York Times report. In 2023, Meta gave away its AI technology after spending millions to build it. DeepSeek used that technology as well as other AI tools freely on the internet to develop its own AI. Meta executives view DeepSeek’s breakthrough as evidence upstarts now have a chance to innovate and compete with tech giants.

WANING DEMAND: DeepSeek’s rise exposes Nvidia’s (NVDA) greatest risk, that the intense demand for advanced chips could wane, Asa Fitch of The Wall Street Journal reports. The concern is DeepSeek’s more efficient way of developing AI could upend the status quo where the most sophisticated AI models require a large number of Nvidia’s AI chips to train. DeepSeek allegedly trained with far fewer Nvidia chips than other models.

U.S.-AI COLLABORATION: GOP Senator Josh Hawley has proposed a bill, the Decoupling America’s Artificial Intelligence Capabilities from China Act, which would cut off U.S.-China cooperation on AI, Morgan Phillips of Fox News reports. The bill would ban exports or imports of AI technology from China, ban American companies from conducting research there, and prohibit any U.S. investment in AI tech companies in China, according to the report. “Every dollar and gig of data that flows into Chinese AI are dollars and data that will ultimately be used against the United States,” said Hawley. “America cannot afford to empower our greatest adversary.” The bill is in direct response to the DeepSeek market shakeup over the past few days. Publicly traded stocks in the space include Nvidia, Meta, AMD (AMD), Intel (INTC), Qualcomm (QCOM), Marvel (MRVL), Texas Instruments (TXN), Micron (MU), Microchip (MCHP), TSMC (TSM), and ASML (ASML).

Trump administration officials are exploring additional curbs on the sale of Nvidia chips to China, Mackenzie Hawkins and Jenny Leonard of Bloomberg report, citing people familiar with the matter The sources emphasized that conversations are in very early stages as the new team works through policy priorities. Officials are focused on potentially expanding restrictions to cover Nvidia’s H20 chips, according to the people. Those chips, which can be used to develop and run artificial intelligence software and services, is a scaled-down product designed to meet existing U.S. curbs on shipments to China, Bloomberg points out. The people added that a decision on any restrictions is likely a long ways off.

STOCK CONSIDERATIONS: KeyBanc raised the firm’s price target on Meta Platforms. The market has digested DeepSeek’s innovations, and the firm believes its first take from its weekly still holds: the commoditization of foundation models is a positive for lowering unit costs and spurring product innovation. Meta stands as the clear beneficiary in KeyBanc’s sector as cost efficiencies/longer useful lives, an app development and user acquisition cycle, and more gradual capex ramps create an upward bias to its/Street 2026 revenue, EPS, and free cash flow, the firm says.

Goldman Sachs raised the firm’s price target on Buy-rated DigitalOcean (DOCN). The company hosted a keynote and several content-rich sessions on its offerings across the infrastructure, platform, and application layers for both core cloud computing and GenAI, announcing several product innovations, most notably its recently available GenAI Platform, which allows customers to create use-case specific agents supported by their own data and foundational LLMs, the firm tells investors in a research note. Following the event, Goldman has a “better appreciation” of the degree to which DigitalOcean’s AI services can provide a structural tailwind to growth as the need for simplified and cost effective AI for all businesses grows.

BofA lowered the firm’s price target on Quanta Services (PWR). China-based AI-startup DeepSeek having released its two newest LLMs with performance comparable to existing U.S. products and claims of notably lower training costs “upended the valuation of stocks with AI/energy demand exposure,” such as Quanta, on concerns that extended energy demand forecasts may fall short of current expectations, notes the firm. BofA finds the derating of Quanta “outsized” given datacenters are an added tailwind, versus core to the story, but it lowers its price target to adjust for the derating of the comparable peer group on unchanged estimates.

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Originally Posted January 29, 2025 – AI Daily: Microsoft, OpenAI probe DeepSeek-linked group access to data

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