Has DeepSeek Burst the AI Bubble or Just Raised the Stakes?
Falling costs, rising competition, and the compute war
Financial market crisis. Record single-day value destruction in the semiconductor and tech sectors.
The stock market has experienced its biggest single-day loss in history for semiconductor and tech stocks, triggered by the alleged bursting of the AI bubble following the release of DeepSeek, a Chinese open-source model. Although DeepSeek has been available for nearly a week, the current market turmoil seems to be the result of a snowball effect, fueled by media coverage showcasing its strong performance against OpenAI’s o1 models and Meta’s Llama. Adding to the disruption, DeepSeek is completely free, except for API access, which is still significantly cheaper than its competitors.
In just a few days, the stock market has plummeted 17%, wiping out approximately $588.8 billion in value. However, I believe many analysts are jumping to conclusions, and in some cases, misinterpreting the situation surrounding DeepSeek’s launch.
DeepSeek is China’s first reasoning-bas…
