Salesforce Stock Rises 10% Due to DeepSeek and Cheaper AI

Salesforce stock has risen 10% in a week – despite other Western tech sector giants taking a massive hit amid the release of DeepSeek. 

CRM stock was at $330.06 on the morning of Wednesday, January 22, rising to $365.57 USD on Tuesday, January 28 – at a time when other Silicon Valley companies are reeling amid the launch of the Chinese AI app, which has overtaken ChatGPT as the top Apple Store app. 

Tech Sector Shaken

AI chip designer Nvidia appears to be very much on the other side of the spectrum, suffering a brutal 18.3% drop since January 22. The company’s shares took the brunt of the plunge on Monday, resulting in a market cap loss of close to $600B, making it the biggest drop ever for a US company.

Venture capitalist Marc Andreessen said that the launch of DeepSeek-R1 was a “Sputnik moment” for the field of AI.

The Chinese AI app is powered by the open-source DeepSeek-V3 model, which was reportedly developed for just $6M; a fraction of the cost of Silicon Valley competitors. 

Both Salesforce and ServiceNow saw increases after Barclays said both companies “should benefit from cheaper AI models”.

Salesforce lets clients access AI models from third-party technology partners like OpenAI, Anthropic, Google, and Amazon.

This might mean that Salesforce’s AI technology will be cheaper to run in the face of a cheaper LLM becoming available.

The cloud giant’s CEO Marc Benioff took to X on January 27 – amid the major stock shakeup – to voice his opinion on why it was happening.

Oracle, Microsoft, and Meta shares were also down on Monday morning amid the sudden appearance of DeepSeek. 

Final Thoughts

Chinese AI appears to be threatening the US’ desire for dominance in the AI industry.

Claims that it was developed for a fraction of the cost of rivals like OpenAI’s ChatGPT might best be taken with a pinch of salt at the moment, but if they prove to be correct, it would be a significant blow for Western tech. 

The United States government had bolstered restrictions on selling American-made advanced chips to China in 2021, but Chinese AI firms started sharing their work more readily, resulting in apparently significant leaps with models running on much less computing power.

The financial results of Microsoft and Meta are expected on Wednesday. Apple’s are expected on Thursday.