This month’s market memo dives into the ripple effects of DeepSeek’s recent AI model releases and their broader impact on tech markets and investor psychology.
Here’s a preview of the January 2025 market memo:
- China’s AI momentum grows: DeepSeek’s model releases showcase China’s emergence as a serious AI contender and spark renewed energy in the open-source community.
- AI pricing wars intensify: DeepSeek’s aggressive pricing is forcing incumbent labs to cut margins and accelerate product rollouts.
- Infra investment continues to rise: Despite cost-efficiency narratives, hyperscalers like Microsoft, Google, and Meta are ramping CapEx to stay ahead.
- Market sentiment remains fragile: Perceived shifts in AI leadership triggered sharp public market declines, including a $600B drop in Nvidia’s value.
- Over $1B in January funding: Notable raises included Hightouch ($80M Series C led by Sapphire), ElevenLabs, Synthesia, Instabase, and others across genAI and infra.
DeepSeek’s breakout moment challenged several core assumptions about the pace and players in AI innovation, leading to a wave of volatility across tech markets. This memo unpacks how shifting narratives, not just technical progress, are driving meaningful change in capital flows and competitive dynamics.