J.P. Morgan Securities analysts hit their decks—that is, their demand-forecasting metrics—after DeepSeek’s news in late January that it had developed a lower-power-intensity AI model.

Revisiting the numbers and models at the firm were its tech, utilities, electrical equipment, multi-industry, energy and other analysts.

The news had “called into question the billions being spent on AI capex—and thus the resulting impact on future growth of natural gas power demand—and weighed on natural gas E&P equities,” Arun Jayaram, energy analyst for the firm, wrote.

The results? The DeepSeek news is good news, actually.

Enter the Jevons paradox.

“The lower cost of DeepSeek is likely to be a positive for AI adoption and ultimately more compute will be needed given increased proliferation/demand,” Jayaram wrote.

J.P. Morgan hosted a call with an unidentified tech expert, who said there remains some skepticism about DeepSeek’s claims.

But “ultimately he believes that this is definitively positive for AI adoption and the world will need more compute as the volume of things like agents will explode with this declining cost curve, which we are just on the cusp of, and that lower pricing has always been key to these advances,” Jayaram wrote.

AI has been called the fourth industrial revolution, following mechanization, electrification and digitization.

Google Trends found scant use of “Jevons paradox” on the internet dating back to 2004 until Jan. 27, setting an all-time high shortly after the DeepSeek news. Prior references often were to the decline in the cost of chips, thus the price tags for computers, phones and other devices.

Gas-weighted producers’ stocks were hit initially on Jan. 27 but recovered along with gas futures. “We think that the decline in natural gas stocks was too punitive,” Jayaram wrote.

Separately, DeepSeek gave the EU some confidence in late January that it might still compete in the AI race with the U.S. and China after all.

“There has been a feeling in Europe that the AI race is over,” DealBook newsletter reported, quoting André Loesekrug-Pietri, president of the Joint European Disruptive Initiative.

“DeepSeek brought a big sense of hope that reshuffling the cards is always possible.”

Comments