DeepSeek AI Market Impact 2025 Recovery: Why Nvidia Hit $5 Trillion

A staggering $600 billion vanished in a single day. Exactly one year ago, a relatively unknown Chinese player, DeepSeek, sent the global tech market into a tailspin. Yet today, those same markets aren't just recovered—they're reaching unprecedented heights.

Analyzing the DeepSeek AI Market Impact 2025 Recovery

In January 2025, DeepSeek released its R1 model, claiming frontier-level performance at a fraction of the cost. The panic was immediate. Nvidia shares plummeted 17%, while Broadcom and ASML saw similar massive sell-offs. Investors feared that the massive capital expenditure on AI infrastructure might suddenly become obsolete.

Eleven months later, those fears have largely evaporated. Nvidia became the first company to reach a $5 trillion valuation in October. Broadcom ended 2025 up 49%, and ASML gained 36%. Gartner analyst Haritha Khandabattu noted that the January event was a "broad repricing" of beliefs regarding cost curves rather than a fundamental collapse of the AI narrative.

The Compute Bottleneck: China's Growing Struggle

Why hasn't the market reacted to DeepSeek's subsequent seven updates? Analysts point to a severe compute bottleneck. Reports from the Financial Times suggest that DeepSeek struggled to train its R2 model on domestic Huawei chips due to U.S. export controls on high-end hardware.

While the Chinese lab focused on efficiency, Western giants doubled down on scale. OpenAI's release of GPT-5 in August and Google's Gemini 3 in November re-established the lead of closed-source frontier models. The market now views DeepSeek's progress as incremental consolidation rather than a disruptive shockwave.