Is the DeepSeek disruption just a symptom of a bigger fundamental issue?

I’ve been reading a lot about DeepSeek over the past few days, and I find it absolutely fascinating what has unfolded. In the process, $1.1 trillion in market cap has been wiped out in the US, just slightly more than the $1 trillion that flowed into the country after Trump’s inauguration, an event he proudly took credit for (congrats, Trump).

What’s truly remarkable, though, is that this massive selloff was triggered by a Chinese startup releasing an AI model so impressive that it can compete with, and in some cases even outperform, the industry’s biggest players. And they claim to have achieved this with just a tiny fraction of the resources used by the established tech giants.

Adding another layer to this is the fact that these claims come from China, making independent verification impossible, raising the strong possibility of misinformation.

But the bigger question is: doesn’t the fact that this event erased $1.1 trillion in market value almost instantly reveal something even more fundamental? Namely, that the entire AI boom is massively overhyped and that valuations in this space are incredibly fragile and unsustainable?

I don’t want to sound like a doomsayer, but this situation has exposed just how inflated the US stock market really is. It’s becoming increasingly clear that current valuations aren’t built on solid ground.

What do you think? Are we on the verge of the bubble bursting, or will it continue to inflate?