DeepSeek-R1's Emergence Triggers Global Computing Power Asset Price Volatility: Wall Street Panic and Divergent A-Share Market Reactions

DeepSeek-R1's Emergence Triggers Global Computing Power Asset Price Volatility: Wall Street Panic and Divergent A-Share Market ReactionsThe emergence of DeepSeek-R1 has sent shockwaves through Wall Street, impacting global asset prices related to computing power. Tech giants like Nvidia, Broadcom, and TSMC experienced significant stock price drops, mirroring a decline in cryptocurrencies such as Bitcoin

DeepSeek-R1's Emergence Triggers Global Computing Power Asset Price Volatility: Wall Street Panic and Divergent A-Share Market Reactions

The emergence of DeepSeek-R1 has sent shockwaves through Wall Street, impacting global asset prices related to computing power. Tech giants like Nvidia, Broadcom, and TSMC experienced significant stock price drops, mirroring a decline in cryptocurrencies such as Bitcoin. This sharp volatility has fueled concerns about a potential bursting of the AI computing power "bubble," leaving global AI bulls apprehensive.

According to Robinhood's pricing data, as of press time, Nvidia (NVDA) fell 6.49% to $133.35 per share, with a maximum drop of 7%, extending Friday's decline; Broadcom (AVGO) dropped 6.29% to $229.30 per share; TSMC (TSM) fell 6.38%; and Constellation Energy fell over 4%. Bitcoin, closely tied to mining costs, also plummeted 6.47% to $98,161.

This market panic is not unfounded. Recently, CNBC aired a 40-minute segment on DeepSeek, interviewing industry figures such as Aravind Srinivas, co-founder of Perplexity, and Chetan Puttagunta, a general partner at Benchmark, a Silicon Valley venture capital firm. The report aimed to shed light on DeepSeek's low cost and its potential impact on AI investment, even suggesting the possibility of "crushing" US stock market confidence.

Chetan Puttagunta stated in the interview: Previously, AI startups needed massive expenditures to stay ahead. But DeepSeek changed thatyou can build such a model with tens of millions of dollars. Now, you can distill a large model into a highly efficient small model, significantly reducing costs.

DeepSeek's impact rapidly spread to almost all AI computing power-related assets. Nvidia, the leading AI computing chip manufacturer, was hit hardest. Its plummeting share price prompted some media outlets to draw parallels between Nvidia's 2024 trajectory and Cisco's performance before the dot-com bubble burst in 2000. At that time, Cisco's market capitalization accounted for 5.5% of the US annual GDP, while Nvidia's current market cap of $3.5 trillion represents approximately 11% of the projected 2024 US GDP. This comparison highlights market concerns about Nvidia's overvaluation.

Cloud computing giant Broadcom, which had been considered a leader in both hardware and algorithms, also suffered significantly, with its after-hours price falling 6.29%, erasing its gains from the previous two weeks.

Constellation Energy, benefiting from the high electricity demand of AI computing, was not spared, experiencing an after-hours drop of nearly 4%. Previously, the market generally believed nuclear power was the only solution to meet the massive, stable, and efficient energy needs of the AI era, but DeepSeek's emergence has cast a shadow on this logic.

DeepSeek's low-cost training has also sparked controversy. Some investors have questioned the authenticity of its training costs, even suspecting deliberate market manipulation. Prominent short-seller "THESHORTBEAR" reversed their stance on social media, questioning the veracity of DeepSeek's low-cost claims and suggesting it was designed to "deliberately sabotage the US stock market."

Chamath Palihapitiya, CEO of Social Capital, stated more bluntly: "Building large AI models is a money trap."

While skepticism abounds, the claim that "DeepSeek is fully open-source and reproducible" has also gained traction. Meta reportedly launched a project to replicate DeepSeek's large model based on its open-source paper, attempting to verify the feasibility of its low-cost training. However, some argue that even if successful, leading AI companies are unlikely to publicly release their replication results, thereby disproving the necessity of their massive valuations and capital expenditures. This has placed the US AI industry in a self-proving paradox.

The A-share market's reaction to DeepSeek differed from that of the US market. On January 27th, the A-share market responded to DeepSeek's global impact. Cambricon-U (688256.SH), China's leading AI computing power stock, closed down 6.69%; SMIC's A-shares and H-shares fell by 4.0% and 8.72% respectively; and other A-share companies related to computing power, such as Wolker Materials (002130.SH), also suffered, hitting the daily limit down multiple times.

However, some A-share listed companies with connections to DeepSeek saw a surge in their stock prices. Daily Interaction (300766.SH) closed up 20% at 24.10 per share, linked to its co-founder Xu Jin's position as a major shareholder in the quantitative investment firm, Fanfang Quant. Furthermore, Zhejiang Oriental (600120.SH) and Huajin Capital (000532.SZ) hit the daily limit up, attributed to their involvement in DeepSeek's investment rounds. The Securities Times reported that Zhejiang Oriental participated in DeepSeek's angel round through its subsidiary Hangzhou Oriental Jiafu Fund, while Huajin Capital participated in the Pre-A round through Huajin Lingyue Fund.

DeepSeek-R1's emergence has triggered global market volatility, with the impact of its low-cost training model on the AI industry landscape being undeniable. The future trajectory and ultimate market evaluation of DeepSeek remain to be seen. This event also highlights issues such as overvaluation in the AI industry and shifting market risk appetite, warranting in-depth consideration and monitoring. Whether it's the panic selling on Wall Street or the differentiated response in the A-share market, DeepSeek-R1's influence on the global capital market is undeniable. This will undoubtedly become a significant turning point in the future development of the AI industry, profoundly impacting investment strategies in related sectors. Subsequent market trends and the response strategies of related companies will be key areas for observation and research. The appearance of DeepSeek-R1 presents new challenges and opportunities not only for AI technology itself but also for financial markets and the global economy.