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Chinese AI DeepSeek causes ripples in the American Stock Market

Chinese artificial intelligence startup DeepSeek introduced its R1 model, marking a significant advancement in AI technology.

Released on January 20, 2025, DeepSeek R1 model is said to be comparable to OpenAI’s o1 model, achieving similar results in various benchmarks. Here’s the catch, the R1 model is open source and completely free, whereas OpenAI charges up to 200 dollars for access to its o1 model.

Market reactions

Deepseek hit number 1 (most downloaded app) in both the App Store and Play Store, sparking mixed reactions in the market. Users quickly compared the Chinese AI to ChatGPT; the results varied depending on the query. However, it is impressive how efficient DeepSeek is and how it stands shoulder-to-shoulder with ChatGPT, considering it costs only 5 million dollars to train compared to the latter, which costs up to 100 million dollars.

Major technology stocks experienced significant declines following the launch of DeepSeek. Nvidia’s shares dropped nearly 17%, resulting in a loss of approximately $593 billion in market value—a record one-day loss for any company on Wall Street. Other tech giants, including Microsoft and Alphabet (Google’s parent company), also saw notable decreases in their stock prices.

In response to DeepSeek’s rapid ascent, Microsoft has initiated an investigation into the company’s methods and technologies. The primary focus is to determine whether DeepSeek utilized outputs from OpenAI’s models to generate synthetic data for training its systems. This inquiry underscores the complexities of intellectual property rights and data usage in the evolving AI sector.

Expert Opinion

The success of DeepSeek’s R1 model has elicited a range of reactions within the tech industry. Some experts view it as a disruptive force in the AI industry. Analysts have noted that DeepSeek’s cost-effective approach to AI development may drive down expenses associated with AI applications, potentially reshaping the industry’s economic landscape.

The TikTok Ban, Trump’s Reprieve, and Potential Buyers

TikTok’s future in the U.S. remains uncertain as lawmakers push for its sale due to national security concerns. 

The U.S. government fears ByteDance, TikTok’s Chinese parent company, could share user data with Beijing or be used for influence operations. In 2024, Congress passed a bill requiring ByteDance to sell TikTok’s U.S. operations or face a ban. The company resisted, and on January 19, 2025, it temporarily shut down U.S. services in compliance. However, newly inaugurated President Donald Trump reversed course, signing an executive order on January 20 that delayed the ban for 75 days, allowing time for a potential sale. Trump called the extension a chance to “determine the appropriate course forward,” per The Guardian.

Now, several buyers are considering bids:

• Elon Musk – Skeptical of the ban but has not committed to buying.

• MrBeast (Jimmy Donaldson) – Teaming up with investors to explore a bid.

• Kevin O’Leary & Project Liberty – Proposing a $20 billion cash offer.

• Oracle & Larry Ellison – Previously attempted to buy TikTok in 2020; Trump supports Ellison as a potential buyer.

If no deal is reached by the deadline, the ban may be reinstated, leaving TikTok’s future in the U.S. hanging in the balance.

Trump immigration order: impact on small businesses

President Donald Trump’s recent executive orders on immigration are set to have a significant impact on U.S. businesses, particularly employers and entrepreneurs. 

These policies tighten immigration rules, making it more difficult for companies to hire foreign workers and creating potential challenges in workforce management, compliance, and operations.

Stricter visa vetting processes could delay the hiring of international talent, adding administrative burdens on companies that rely on skilled foreign professionals. Many businesses may need to reassess their recruitment strategies to account for these extended processing times. Additionally, increased enforcement actions, including workplace audits and raids, put employers at greater risk of legal scrutiny. Companies that hire undocumented workers—whether intentionally or not—could face fines and operational disruptions, making compliance a top priority.

Beyond workforce concerns, enhanced border security measures may also impact supply chains. Companies that depend on cross-border trade could experience delays in the movement of goods, increasing costs and complicating logistics. This could particularly affect industries such as agriculture, hospitality, and construction, which are already struggling with labor shortages. With a reduced immigrant workforce, businesses in these sectors may find it harder to meet demand, leading to higher prices and slower growth.

To navigate these changes, employers will need to review compliance programs, ensuring their hiring practices align with federal regulations. Investing in training and workforce development programs to build domestic talent could also help mitigate labor shortages. Additionally, staying informed on evolving immigration policies and seeking legal counsel will be crucial in adapting to the shifting regulatory landscape.

While these executive orders present challenges, businesses that proactively adjust their strategies can better manage the uncertainties ahead. By focusing on compliance, workforce diversification, and supply chain resilience, companies can minimize disruptions and maintain operational stability in an increasingly complex environment.

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Until next time, Best Regards.

Alex