Like many of you, we woke up to the explosive news of DeepSeekAI, the Chinese artificial intelligence startup founded by Lian Wenfeng that made international headlines — and yes, maybe we did consult with ChatGPT to clean up this introduction... is that cruel?

This new AI tool, DeepSeekAI, was said to be created and launched at just a fraction of the cost and manpower, $6 Million and approximately 200 engineers, in comparison to its Silicon Valley competitors which have billion dollar spends.

Not to mention, the former was allegedly created without the use of any Nvidia chips. When news of this broke out, it ultimately led to a $600 Billion market cap loss in a single day. The largest recorded loss in U.S history, followed by our personal nomination of "Twinkies" which we think comes in close second. Objectively of course.

Headlines all over the world speak of the market's total loss of $2 Trillion among tech and AI companies. So, shall we take a closer look?

At first glance, Monday’s market reaction looked more like panic than a structural shift in tech. Despite the wipeout of Nvidia’s market cap—over 70% of U.S. stocks closed higher. Financials, represented by the XLF ETF, even traded into all-time highs. Financials lead, not lag, could this be the signal we’re looking for?

Zooming in on Nvidia, the dramatic $600 billion collapse has drawn attention to Silicon Valley’s perceived vulnerability, though the headline may be overplayed. In times like these we mustn't let the media lead us to forget that, although the loss is seismic, we are referring to a record-breaking stock for all intents and purposes.

Early signs of anxiety from traders quickly gave way to broader optimism, reflecting heightened competition in artificial intelligence.

Interestingly, the selloff didn’t spill over to other AI powerhouses. Meta, pouring billions into AI, and Amazon, benefiting from AI compute demand via AWS, both closed at all-time highs. Investor confidence in these suggests the market isn’t entirely convinced DeepSeek’s abilities will drive the Silicon Valley gravy train to a halt. For now, the panic seems concentrated, not transformative.

The competitive AI and tech landscape, now clearly in full swing, typically lowers barriers to entry and can benefit smaller companies eager to develop or adopt cutting-edge technologies. As a result, the sector’s long-term potential may be strengthened rather than diminished.

Meanwhile, former President Trump’s portrayal of DeepSeek as a “wake-up call” may spark both hope and unease. A new executive order tasks David Sacks with removing barriers to American leadership in AI, demonstrating strong support for technological expansion at the highest levels.

So, the trillion-dollar question remains; will market sentiment pick up over the next few days?

---

Co-written by Valentina Rose Gasparian with substantial insights and key contributions provided by senior leadership.