One year after the Chinese startup DeepSeek caused a massive market panic, the global AI boom has proven to be much more resilient than skeptics expected. Currently, tech giants and chipmakers like Nvidia (NVDA) are trading at or near record highs, showing that the fear of cheap AI replacing expensive hardware was largely a temporary distraction. While some called DeepSeek a permanent shift in the industry, the last 12 months have shown that the demand for high-end computing power is actually growing faster than ever.
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Nvidia Rebounds from Historic Wipeout
Exactly one year ago, DeepSeek’s new AI model erased a record $589 billion from Nvidia’s market value in a single day. At the time, investors feared that because DeepSeek built a powerful model for a fraction of the usual cost, nobody would need Nvidia’s expensive chips anymore. This knee-jerk reaction sent shockwaves through the S&P 500 (SPX), dragging down tech, energy, and utility stocks alike.
However, the panic didn’t last long, and Nvidia’s growth has since reached levels that defy all logic. The company’s stock is up 58% since that sell-off, recently helping it hit a $5 trillion valuation. Experts now agree that while DeepSeek showed AI can be made more efficiently, the most advanced models still require the massive scaling that only thousands of top-tier GPUs can provide.
Hyperscalers Double Down on Spending
One of the biggest fears during the DeepSeek era was that giant companies like Microsoft (MSFT) and Meta (META) would slash their budgets for AI hardware. The opposite has happened, with capital expenditures (capex) expected to reach roughly $600 billion in 2026. This money is being used to build massive data centers that serve as the foundation for both internal projects and third-party AI services.
This wave of spending has broadened the AI trade to include more than just chipmakers. Investors are now piling into memory stocks like Micron (MU) and Western Digital (WDC), as well as energy providers like Constellation Energy (CEG). These companies provide the physical parts and power needed to keep AI brains running.
Analysts Debate the China Threat
At the 2026 World Economic Forum in Davos, Google DeepMind CEO Demis Hassabis described the DeepSeek craze as a “massive overreaction.” He noted that while Chinese firms are excellent at catching up to current technology, they have yet to show they can innovate past the frontier set by American labs. This gap suggests that U.S. tech leadership remains secure for the foreseeable future.
Even so, the DeepSeek moment served as a reminder that technology moves incredibly fast. While Nvidia still dominates the market, other companies like Alphabet (GOOGL) and Broadcom (AVGO) are successfully launching their own custom AI chips. This evolution means that while the need for computing power is infinite, the ways that power is delivered are becoming more diverse and competitive.
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