As we know, in recent years, we have seen artificial intelligence continue to alter many people’s lives and industries, from hospitality, education, entertainment, finance, and many more. The rise of artificial intelligence has also brought both opportunities and challenges. One of the recent cases that became a global controversy is China's groundbreaking AI advancement called DeepSeek. Designed by China, a country that is popular for its technological innovation, the AI has the ability to revolutionize stock trading with unparalleled precision. The one-year-old startup has revealed a stunning capability to the world and presented a ChatGPT-like AI model called R1, which has all the familiar abilities like OpenAI’s, Google's, or Meta’s popular AI models. The company also said recently that it had spent just $5.6 million on computing power for its base model, compared with the hundreds of millions or billions of dollars U.S. companies spend on their AI technologies, which has sent shockwaves to many.
Many people in the tech industry also praised the AI technology, including Marc Andreessen, one of the world’s leading tech investors, that called DeepSeek as “one of the most amazing and impressive breakthroughs I’ve ever seen.”
What is DeepSeek?
The startup DeepSeek was founded in 2023 in Hangzhou, China, and released its first AI large language model later that year. Its CEO Liang Wenfeng previously co-founded one of China’s top hedge funds, High-Flyer, which focuses on AI-driven quantitative trading. By 2022, the fund had amassed a cluster of 10,000 high-performance A100 graphics processor chips from California-based Nvidia, which are used to build and run AI systems. The U.S. soon after restricted sales of those chips to China. DeepSeek has said its recent models were built with Nvidia’s lower-performing H800 chips, which are not banned in China, sending a message that the fanciest hardware might not be needed for cutting-edge AI research. DeepSeek began attracting more attention in the AI industry last month when it released a new AI model that was on par with similar models from U.S. companies, such as ChatGPT maker OpenAI, and was way more cost-effective. The chatbot became more widely accessible when it appeared on Apple and Google app stores early this year. It also became the most downloaded app on Apple’s US App Store a couple of days ago.
What makes DeepSeek groundbreaking?
DeepSeek’s AI relies on advanced machine learning to analyze data at lightning speed. It can process market trends, global events, and even social media sentiment to guide Chinese investors. While this innovation is empowering for its users, its ability to predict market movements and exploit global inefficiencies is putting pressure on international markets. One of the “victims” is the U.S. stock market. The market has already experienced unexpected drops as DeepSeek's influence causes Chinese traders to shift their investments away from Western markets, exacerbating sell-offs in tech-heavy indices such as the NASDAQ. Similarly, the crypto market, already known for its volatility, has taken a hit as well as Chinese capital flows out of major coins like Bitcoin and Ethereum, spurred by DeepSeek’s strategic reallocations.
The effects of DeepSeek are amplified by its timing. The U.S. economy, grappling with inflation and tech layoffs, was already vulnerable when the platform entered the scene. With Chinese traders using DeepSeek’s tools to pull out of Western assets and reinvest domestically, the already fragile balance of global financial markets is being disrupted easily. One example is how Nvidia has lost nearly $600 billion in market value because of the Chinese AI, the biggest drop in the history of the US market, according to Bloomberg. Analysts have warned that the new wave of AI-driven trading may cause prolonged instability as traditional systems struggle to adapt to DeepSeek's rapid, data-driven strategies.
The AI advancement is also leading investors to question the lead that U.S. companies have, how much is being spent, and whether that spending will lead to profits or even overspending. Especially since the U.S. is known for many things driven by tech and AI.
However, the AI has been a target of critics.
Many critics argue that the platform’s unchecked influence underscores the risks of AI in finance. DeepSeek’s dominance highlights how technology can skew market dynamics and even spark unintended consequences on a global scale. This led to a call for international regulations that are also growing louder, with experts suggesting that collaboration between countries is needed to address these challenges. The newly inaugurated U.S. President, Donald Trump, has also said that DeepSeek’s release “should be a wake-up call” for American tech industries to laser-focus on competing to win.
Conclusion
While DeepSeek may be a beacon of innovation for China’s investors, its disruptive impact on the U.S. stock and crypto markets is a stark reminder of the double-edged sword that is AI-driven finance. As AI continues to shape the future of investing, platforms like DeepSeek serve as both a warning and an opportunity. For markets worldwide, adapting to this new reality will require more than just resilience—it will demand proactive strategies and a commitment to balancing innovation with stability. Regardless, DeepSeek’s sudden arrival is a “flex” by China and a “black eye for US tech” currently. What DeepSeek has done also could have a significant impact and spark renewed investor interest in undervalued Chinese AI companies, providing a growth story in the future.
