Buying the Snowflake Stock Price Dip Could Be Strong DeepSeek AI Play

The Nasdaq 100 was hit hard at the open on Monday due to concerns about the impact of China’s bargain-basement AI model, DeepSeek. There is much confusion about how it will impact the AI industry, but the fear may be overblown. Quite a few of the hardest-hit stocks are off their lows, but other groups, like data centers, are still seeking a low.

Cheaper AI models are going to be a boom for some AI industry participants. One name I added today was Snowflake, Inc. SNOW. Snow is a cloud-based storage company that provides a platform for data analysis and management. It offers storage, data sharing, AI tools and analytical tools.

The stock was down sharply prior to the open on Monday, along with many other technology stocks, due to the panic created by DeepSeek. However, SNOW may actually benefit from cheaper AI models like DeepSeek, since its customers are more interested in "generative AI," which creates new content or analyzes data from which they already have.

SNOW had a very strong third quarter that caused the stock to gap higher and form a higher-level base. Analysts are very bullish on the stock, with 28 "buy" ratings and four "hold." The top price target is $225 and the low is $180.00 versus the current price of around $169.

Earnings are due out around February 26, and it is likely the market will anticipate another strong quarter. The volatility being created by DeepSeek looks like an opportunity since cheaper large-language AI is likely to create more business for SNOW.

Another AI name that looks good to me is Palladyne AI (PDYN). PDYN develops AI and machine learning software for robotics and drones. A company like this benefits from cheaper AI models because it uses data to generate software.

DeepSeek is shaking things up in the AI industry. There will be some losers in the group, but there will also be winners.

At the time of publication, DePorre was long SNOW and PDYN.