Chinese artificial intelligence startup DeepSeek has unveiled its latest AI model, DeepSeek-V4, to a notably subdued market reception, a stark contrast to the global impact of its previous generation. Last year, the Hangzhou-based company's DeepSeek-V3 and R1 models triggered a worldwide tech share selloff, prompting investors to scrutinise the immense spending on AI infrastructure.
These earlier models, which DeepSeek asserted were trained with a mere fraction of the computing power utilised by their US counterparts, were widely regarded by analysts as a 'black swan' event. They compelled a sudden re-evaluation of assumptions concerning costs, competition, and China's innovative capabilities amidst US chip restrictions.
Yet, the muted response to DeepSeek-V4, launched on Friday, highlights how swiftly these market assumptions have evolved. Industries and financial markets have rapidly become accustomed to the development of highly efficient, low-cost AI models, even when operating under significant computing constraints, thus diminishing the element of surprise.
Lian Jye Su, chief analyst at Omdia, remarked: 'This announcement followed a rather predictable path.' He further noted that advancements in model architectures and efficiency have since been extensively explored across both industry and academia, normalising what was once a disruptive breakthrough.
Benchmark data support that view. According to Artificial Analysis, DeepSeek-V4 Pro shows significant improvement over previous versions but overall ranks among leading open-weight models rather than clearly surpassing rivals, with competitors such as Kimi and Qwen narrowing the gap. Analysts say the earlier shock was driven by a convergence of factors: lofty valuations of US tech firms, expectations of continued dominance by a handful of players, and the emergence of a relatively unknown Chinese startup delivering unexpectedly strong results.
Alfredo Montufar-Helu, managing director at Ankura China Advisors, said the significance of V4 lies less in market impact and more in the US-China race for tech supremacy. He pointed to DeepSeek's adaptation of V4 to run best on Huawei chips, as tightening US export controls are designed to cut off the Chinese market's access to cutting-edge US chips that power AI model development.
