DeepSeek’s arrival on the scene couldn’t have happened at a worse time for US stocks. Excess liquidity is falling at a pace rarely exceeded, valuations are at all-time highs, and everyone is long. Whether US tech firms’ moats are safe or not, the market has plenty of downside risk.
If we were limited to just one chart to dramatize the potential for upheaval in global markets after DeepSeek’s R1 AI model was released, it would be the one below. It shows the gulf that has opened up between US and Chinese tech shares since the pandemic.
