Taking Stock of the DeepSeek Shock

As China heads into the Lunar New Year, DeepSeek has “gone quiet” into “holiday mode.” With its Hangzhou headquarters deserted, the rest of the world ponders the shock and reverberation after the company’s release of its artificial intelligence (AI) reasoning model R1 and non-reasoning model V3. These models perform on par with OpenAI’s o1 reasoning model and GPT-4o, respectively, at a minor fraction of the price. On January 27, the U.S. stock market and tech stocks took one of the biggest tumbles in history, with chipmaker Nvidia falling 18%, losing $589 billion in market value. However, the company’s shares recovered the next day by about 9%.