Wall Street closes higher despite the DeepSeek AI scare

Photo: Alex Luna · Pexels

Wall Street ended the session with gains thanks to a recovery in chip stocks, after the market went through a bout of widespread nerves triggered by the advance of DeepSeek, the Chinese artificial intelligence firm. What initially translated into a broad selloff in AI-linked stocks ended up reversing throughout the day, with Micron and other semiconductor companies among those bouncing back the hardest.

The episode reopened a debate that is already familiar to markets: just how much of a real threat Chinese AI advances pose to major US tech companies. Several analyses have suggested that DeepSeek alone won't be enough to sink US AI giants, even though its mere appearance is enough to trigger sharp stock price swings.

A pattern the market already knows

This isn't the first time a piece of news related to Chinese AI has shaken Wall Street, only for the market to recover part or all of the lost ground in the following hours. Episodes like this show how sensitive the market has become to any signal that could shift the dominant narrative about who is leading the tech race.

With earnings season also on investors' radar, attention is now split between the numbers companies report and the chance that new AI developments, at home or abroad, could once again shift market sentiment in either direction.