AI Daily: Lawmakers looking to ban DeepSeek app from government devices

 Morgan Stanley sees selloff in Nvidia’s shares on DeepSeek concerns as a buying opportunity

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:

DEEPSEEK BAN: 

Lawmakers are planning to introduce legislation on Thursday that would bar DeepSeek’s chatbot application from government-owned devices, amid security concerns that the app could provide user information to the Chinese government, The Wall Street Journal’s Natalie Andrews reports. DeepSeek, a Chinese-built large-language open-source model that claims to rival offerings from Microsoft-backed (MSFT) OpenAI’s ChatGPT and Meta Platforms (META) but using a much smaller budget. DeepSeek’s new AI model is being praised for being cost-effective and capable of running on less-advanced chips, which seems to have raised questions about the high valuations of companies like Nvidia (NVDA). “This should be a no-brainer in terms of actions we should take immediately to prevent our enemy from getting information from our government,” Josh Gottheimer, a New Jersey Democrat, said.

OPPORTUNITY: 

Morgan Stanley acknowledges that DeepSeek creates some headwinds around export controls and longer-term investment and that sentiment on Nvidia has worsened around potential longer-term risks, but tells investors that near term checks are firming, both for Hopper and “all flavors of Blackwell.” Talking to cloud contacts, the firm is hearing that “none of this changes the plans of any of the major participants,” adds the analyst, who says Blackwell supply visibility continues to build and that customer desire to spend is “clearly on display.” The recent DeepSeek selloff is an opportunity, concludes the analyst, who maintains Nvidia as a “Top Pick”.

LIKELY BENEFICIARY: 

Evercore ISI raised the firm’s price target on Arm (ARM) after December quarter earnings that reinforce the firm’s view of Arm as “the likely biggest beneficiary of AI penetration at the edge.” This penetration “appears closer than we originally expected due to developments by DeepSeek,” the firm added in a post-earnings note. Management suggested aggressively investing in R&D for emerging AI opportunities, which Evercore views as a positive for longer-term growth, even if it translates to less near-term operating leverage.

GENAI GROWTH LEVERS: 

TD Cowen raised the firm’s price target on Confluent (CFLT). The firm noted they hosted a call with one of the company’s partners that was bullish on Q4 performance and 2025 outlook, citing new GenAI growth levers starting to build and a notable improvement in Flink GTM motions. Cowen expects a solid Q4 beat and in-line guide, but thinks building growth levers should drive numbers higher through FY25.

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Originally Posted February 6, 2025 – AI Daily: Lawmakers looking to ban DeepSeek app from government devices