DeepSeek's AI Shock Fades: Market Panic Recedes, US Tech Giants Thrive

• A year ago, Chinese AI lab DeepSeek's models caused market panic, with Nvidia, Broadcom, and ASML shares plunging over fears of reduced AI infrastructure demand.
• Despite initial fears, these companies have since seen significant gains, with Nvidia becoming the first to cross a $5 trillion valuation, showing DeepSeek didn't dent AI spending.
• DeepSeek's subsequent updates were evolutionary, not disruptive, and training frontier AI still requires vast computing power, not just software optimization.
• US export controls limited China's access to advanced chips, hindering DeepSeek's ability to scale at the same pace as Western counterparts.
• US innovation from OpenAI, Google, and Anthropic continued rapidly, reinforcing the need for more infrastructure investment, intensifying the AI arms race.

Why It Matters: DeepSeek's initial AI shock was more psychological than structural, ultimately intensifying the AI arms race.