Almost a year ago, DeepSeek made a significant impact on the AI industry.

The emergence of a new model from this relatively unknown Chinese AI lab sent shockwaves through the tech sector, shaking the confidence in U.S. dominance and causing the stocks of major Western tech companies to nosedive.

Nvidia’s shares dropped by 17%, wiping nearly $600 billion off its market value. Similarly, Broadcom, a U.S. chipmaker, also saw a 17% decline, while ASML experienced a 7% decrease in just one day.

Fast forward eleven months, and these tech giants have not just bounced back but have continued to thrive. In October, Nvidia became the first company to reach a $5 trillion valuation. Over the course of 2025, Broadcom’s shares climbed 49%, and ASML’s stock appreciated by 36%.

“The January [DeepSeek] (R1) event prompted a significant reevaluation of global perceptions regarding the cost dynamics of frontier models and China’s competitive edge, impacting the semiconductor and hyperscaler narrative,” explained Haritha Khandabattu, a senior director analyst at Gartner, to CNBC.

Since that initial shock, DeepSeek has released seven additional model updates. However, none have caused the market turbulence seen in January. So, why have the markets remained steady?

Founded in 2023, DeepSeek released a free, open-source large language model (LLM) in late 2024, called V3, which it said was trained with less powerful chips and at a fraction of the cost of models built by the likes of OpenAI and Google. 

Weeks later, in January 2025 it released a reasoning model, R1, that hit similar benchmarks or outperformed many of the world’s leading LLMs. 

The Chinese AI lab’s January release “really surprised the market,” Alex Platt, senior analyst at investment firm D.A. Davidson, told CNBC. “The narrative [at the time] was that China was 9 to 12 months behind the U.S.”

The promise of a model achieving similar results to the most advanced systems, but using less compute, raised concerns in the market that the demand for AI infrastructure would be impacted, and revenue for firms like Nvidia would be hit, Brian Colello, senior equity analyst at Morningstar, told CNBC.

“Instead, we saw no slowdown in spending in 2025, and as we look ahead, we foresee an acceleration of spending in 2026 and beyond.”

There’s also the type of releases DeepSeek has made since January, all of which have been updates to the V3 and R1 models as opposed to entirely new models. 

While DeepSeek’s more recent model releases are “credible step changes” in efficiency and capability, the market has viewed them as a “continuation and consolidation rather than a new shockwave,” Khandabattu said.

Part of the reason DeepSeek hasn’t released a new model is likely due to limited compute, analysts told CNBC.

“Compute has been a large bottleneck,” said Platt. “You can only do so much algorithmic research and find so many architectural ingenuities.”

The AI company delayed the release of its R2 model, which was initially planned for May, because of challenges training it on homegrown Huawei chips, the Financial Times reported in August. 

Chinese authorities had encouraged DeepSeek to use the processors as it looked to reduce reliance on U.S. alternatives in the face of export controls on Nvidia’s most powerful chips, the publication said. DeepSeek has been approached for comment on the report.

“China’s been constrained in the amount of computing power it’s been able to access over the last couple of years, in large part because of U.S. restrictions on the sale of chips,” Chris Miller, author of “Chip War,” told CNBC.

“If you want to build advanced models, you need access to advanced compute.”

DeepSeek said in a research paper it released earlier this month that it acknowledges “certain limitations when compared to frontier closed-source models” such as Gemini 3, including compute resources. 

Markets have also been reassured of continued U.S. leadership in the AI space by new advanced model releases from frontier labs in the West. 

In August, OpenAI unveiled GPT-5, Anthropic released Claude Opus 4.5, and Google launched Gemini 3 in November. 

“The competition between these providers is intense with rapid model releases and incremental improvement in capabilities,” Gartner Analyst Arun Chandrasekaran told CNBC. “As a result, fears of a sudden commoditization shock have eased.”

But there are signs DeepSeek is gearing up for a more significant model release in the coming months. On New Year’s eve the company published a paper detailing a more efficient way of developing AI models.

Wedbush Securities’ Dan Ives thinks there are more shocks in the market to come. “Some of these moments that we’ve seen, we’ll continue to see next year,” he told CNBC.

“There’ll be another DeepSeek.”