Peter S. Kim

Over the Lunar New Year break, China ambushed global markets and claimed its place in the artificial intelligence (AI) universe by launching DeepSeek as its national champion to challenge U.S. dominance.

The news immediately followed the inauguration of U.S. President Donald Trump, whose "America First" policies have centered around a trade war with China that was supposed to make it difficult to catch up to the U.S.' lead in technology. The timing of DeepSeek's proclamation to the world folds neatly into Chinese President Xi Jinping's "Made in China 2025." This grand plan aims to localize imports of critical components and materials by 70 percent this year. It is a politically powerful way for China to remind the world that it has not given up on the tech race, particularly AI. Besides the political points from the announcement, there are key investment implications from the emergence of China's latest disruptor, which comes with structural strengths and weaknesses that will have a lasting impact on investment in the ultraspeculative technology industry.

For the past few years, OpenAI and other AI companies have established an unquestioned investor consensus that their business model justifies an almost unlimited need for capital, energy and Nvidia chips. The investment world acceded enthusiastically, betting the house that AI, led by U.S. innovation, will change the world and deserves investments of enormous valuation premiums. Now, the DeepSeek chatbot has shaken the financial world not........

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