12:21 PM EST, 01/28/2025 (MT Newswires) -- The current frenzy around DeepSeek will prove to be "tech AI head fake" that will be short-lived as more details about its model and China resources used emerge, Wedbush Securities said in a note Tuesday.

Analysts, including Daniel Ives, said that the claim that this model was built for $6 million without using Nvidia's ( NVDA ) next generation hardware is likely exaggerated, and it's at the center of the debate that sparked Monday's tech selloff.

Wedbush expects it won't change the trajectory of AI spending. "We expect more innovation in AI and large language model costs to come down..that is ultimately a great thing for computing power, use cases, and where the tech world is going in this 4th Industrial Revolution."

The analysts added the panic regarding the DeepSeek model is less about the model and more about how it was built.

The analysts said while chip export controls will be a challenge, the Chinese tech community is "very resourceful" and is developing impressive AI technology and models.

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