BUZZ-Data center shares extend DeepSeek-triggered losses; Jefferies remains bullish

Shares of data center firms falling on Tues, adding to sharp losses on Mon after Chinese startup DeepSeek triggered steep selloff in artificial intelligence-linked names

Roll out of DeepSeek's free model raised doubts for continued strong demand for data centers

Digital Realty's DLR.N shares down 5% on Tues. Stock shed nearly 9% loss in previous session, hitting over over 3-mth low

Equinix EQIX.O off 1%, Iron Mountain IRM.N down ~6% and Core Scientific CORZ.O down 7% on Tues. On Mon, EQIX lost ~4%, IRM fell >6%, while CORZ tumbled ~29%

Vertiv Holdings VRT.N, which designs and builds data center infrastructure, last down 2%, after 30% plunge on Mon

In research note late Mon, Jefferies said it doesn't "subscribe to the knee-jerk reaction" that DeepSeek's model will significantly slow data center investment, adding that sell off on Mon creates a buying opportunity for DLR, EQIX and CORZ

Jefferies said it "would be surprised to see hyperscalers slow their capex plans as the AI space just got even more competitive, and the risk of falling behind is too high"

Low cost of DeepSeek's R1 model will drive prices down for all models, Jefferies said, which will accelerate enterprise adoption, driving colocation data center demand

In 2024, DLR rose 32%, EQIX gained 17%, IRM surged 50%, while VRT rocketed ~137%

Shares of CORZ have more than tripled since co emerged from bankruptcy last Jan