A shocking Chinese AI advancement called DeepSeek is sending US stocks plunging
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PRC Company DeepSeek AI Sparks $1T US Stock Selloff
Above: Artificial intelligence (AI) mobile app icons for DeepSeek, ChatGPT, and Google Gemini are arranged in Riga, Latvia, on Jan. 27, 2025. Image copyright: Andrey Rudakov/Contributor/Bloomberg via Getty Images
The Spin
Narrative A
DeepSeek R1's development under US sanctions showcases their ineffectiveness in curbing China's AI innovation. Despite export controls on chips, DeepSeek has not only matched but in some cases surpassed ChatGPT o1, proving that these restrictions drive efficiency and ingenuity. By optimizing limited resources, DeepSeek has democratized AI — offering powerful tools to those in both rich and poor countries.
Narrative B
The AI race is far from over, with US companies still poised to reclaim leadership. While DeepSeek is impressive, its advancements are just part of a new dynamic where innovation cycles change monthly, not yearly. US firms like Google and OpenAI retain strong research capabilities and work within a vibrant, competition-based market of competition, which will likely lead to breakthroughs not solely dependent on hardware supremacy.