Goldman Sachs has identified DeepSeek, a Chinese AI startup, as a potential catalyst for a different kind of tech stock rally in China compared to the previous Tencent-led surge. The analysis suggests that AI development in China is progressing rapidly, with DeepSeek’s recent release of a large language model that reportedly outperforms GPT-4 in certain Chinese-language tasks. Goldman analysts highlight that China’s AI sector is evolving distinctly from the 2020-2021 tech rally, focusing more on fundamental AI capabilities rather than consumer internet services. The report emphasizes that Chinese companies are making significant strides in AI development, despite facing challenges such as US chip restrictions. DeepSeek’s emergence represents a new wave of Chinese AI innovation, potentially leading to a more sustainable tech sector growth based on AI infrastructure and applications. The analysts note that while previous tech rallies were driven by consumer-facing applications, the current AI-driven growth could be more substantial and long-lasting. Goldman Sachs suggests that investors should pay attention to companies developing core AI technologies and infrastructure in China, as these could be the primary beneficiaries of the next wave of tech sector growth. The report also acknowledges the competitive landscape between Chinese and Western AI companies, while highlighting China’s unique advantages in certain AI applications and language processing capabilities.