Goodman Group (ASX: GMG) shares had a day to forget on Tuesday.
The integrated industrial property company's shares ended the session 8% lower at $35.00.
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Why did Goodman shares crash?
Investors were hitting the sell button yesterday after the emergence of Chinese artificial intelligence (AI) startup DeepSeek raised concerns about the potential demand for the most advanced chips and data centres and triggered a selloff in AI-related stocks.
Goodman has been betting big on data centres on the belief that they will be needed to cope with the heavy demands of AI.
In its most recent quarterly update, Goodman's CEO, Greg Goodman, said:
Our development capabilities and financial capacity position the Group to capitalise on significant opportunities, including orienting the development workbook towards data centres and higher intensity use outcomes, with a number of additional starts expected in calendar 2025.
The global demand for data centres has created an opportunity for the Group to service the need for powered infrastructure. We have continued to expand and secure our global power bank to meet this demand, and we've evolved our delivery capabilities to offer a range of options, which now include fully fitted facilities, with operational solutions.
However, with DeepSeek achieving comparable results to ChatGPT using a fraction of the GPUs, investments, and power use, the market appears concerned that the world will not need as much data centre capacity as forecast.
Is this a buying opportunity?
The team at Citi believes that the weakness in Goodman shares has created a buying opportunity for investors.
Especially given its belief that DeepSeek will not reduce demand for data centre services.
In fact, the broker suspects that DeepSeek could have the opposite effect on the data centre market and drive further demand for capacity. This would be good news for Goodman and the likes of NextDC Ltd (ASX: NXT) and Digico Infrastructure REIT (ASX: DGT), which were also sold off on Tuesday. Citi said:
In our view, DeepSeek most likely drives further demand for data centers globally with advanced computational capabilities, high capacity storage, robust networking, energy efficient designs and infrastructure.
In light of this, the broker has reaffirmed its buy rating and $40.00 price target on Goodman's shares.
Based on its current share price of $35.00, this implies potential upside of 14.3% for investors over the next 12 months.
All in all, this selloff could have created an opportunity for investors to buy this high quality company at an attractive price.
