What investors can learn from the DeepSeek tech shock
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This post originally appeared in the Business Insider Today newsletter.You can sign up for Business Insider's daily newsletter here.Welcome back! Global markets have been rocked after the Trump administration ordered 25% tariffs on goods from Canada and Mexico and a 10% tariff on China, which are set to start on Tuesday. All three countries vowed to retaliate.Business leaders are urging Trump to reconsider, fearing a global trade war that could wreak havoc on American industries.In today's big story, last week's DeepSeek drama is a good opportunity for investors to reassess their positions.What's on deckMarkets: Crypto coins hoping to surge thanks to celebrity endorsements. What could possibly go wrong?Tech: Meta is showing no signs of slowing down this year.Business: Trump's deportation plan is set to be big business for private prisons.But first, some lessons learned.If this was forwarded to you, The big storyPreparing for next time Deepseek VCG/VCG via Getty Images It was the shock heard around the world until it wasn't.DeepSeek's arrival hit the market, especially tech stocks, hard and fast. Things eventually stabilized before turning catastrophic, but the episode provided a valuable lesson for investors on the risks that come from a market so heavily focused on one theme.Business Insider's Matthew Fox unpacked the DeepSeek crash by looking at five investing lessons learned from the saga. His findings include everything from understanding the different layers of AI to the considerations that need to be made for cheap AI's impact on the bond market (Hint: It's a good thing.)It's an interesting and useful exercise considering there's likely more volatility ahead due to the market's structure: a handful of stocks at record valuations all focused on the same thing dictating where the rest of the market goes.For some, DeepSeek was the first break in the AI-built dam. "You have a small little chip on the glass. Now they realize, oh, it's not infallible. Maybe I should revise," "Black Swan" author Nassim Taleb said last week.Others are much less bearish, feeling it was more a product of investors rethinking the already sky-high valuations in the tech sector.Regardless of where you fall on the AI-belief spectrum, it's not something you can ignore as an investor. With seemingly everyone talking about how the tech will impact their industry, failure to acknowledge feels akin to investing negligence.So, the key lesson from DeepSeek might be that, for better or for worse, AI rules the roost.News briefTop headlinesMusk saysDOGE is working 120 hours a week.Robinhood's media arm Sherwood lays off staff as it looks to 'streamline team structure.'Jefferies CEO slams 'vitriolic attacks' over young banker's death, and offers support to junior staff. Read the memo.RTO mandates have workers looking for alternatives to companies like Amazon and JPMorgan.Beyonc wins album of the year for 'Cowboy Carter' at the 2025 Grammys her first triumph in the awards show's biggest category.3 things in markets Greg Nash / Pool / AFP via Getty Images; Joe Maher/Getty Images; Mike Marsland/Mike Marsland/Getty Images for Sky; Rebecca Zisser/BI 1. Who's behind the celebrity meme coin scams? Celebrity meme coins are prime targets for classic pump-and-dump schemes, which can leave investors with suddenly worthless tokens. One crypto sleuth tracked down the culprit but was left with a bigger question: Were the celebrities in on it?2. Trump might need to get out of his own way regarding the Fed. The president has repeatedly demanded the Fed lower interest rates, which Fed Chair Jerome Powell has shrugged off. Though Trump blames Powell for inflation, Wall Street forecasters think the bigger obstacle to lowering it is the president's own trade plans.3. #noregrets. Okay, well maybe a few but these four older Americans told BI how they eased into retirement without much they'd change in retrospect. "Do I wish I had more money? Yes, but I would not have done anything different," one said.3 things in tech Meta CEO Mark Zuckerberg has released a version of "Get Low" with the rapper T-Pain. David Zalubowski/ AP Images 1. Can't stop, won't stop. If the first few weeks of the year are any indication, Meta CEO Mark Zuckerberg is making good on his promise that 2025 will be the company's "year of intensity." It's already made content moderation changes and realigned itself with Trump, and there are shifts in the workforce and AI development still to come.2. President Trump's proposed US government stake in TikTok could be a legal nightmare. The government owning a piece of a major social app would be new territory and for it to work, the dealmakers would need to set up editorial guardrails to protect users' First Amendment rights. Still, legal analysts told BI that TikTok's content moderation could create an avalanche of legal challenges and make the app hard to run.3. The race is on to recreate DeepSeek's market-breaking AI. Companies like Amazon and Microsoft have already adapted versions of the R1 model for their cloud platforms. Many are also attempting to replicate it from the ground up and putting DeepSeek's claims to the test. As DeepSeek's model continues to gain traction, some cloud service and AI interference providers say they're noticing increased demand for Nvidia H200 chips.3 things in business mactrunk/Getty, Tyler Le/BI 1. The quiet winner of Trump's mass deportation plan. Trump's aggressive stance on immigration has already propelled stock prices in one industry: private prisons. The sector, which was on the outs with the Biden White House, stands to rake in millions more from immigrant detention.2. Hotels for the homeless. Some US cities are taking part in a bold new experiment: buying and renovating hotels to house the homeless. Affordable converted hotels can be a "lower-barrier-for-entry option" for those struggling to find a home especially as neighborhoods like Brentwood in Raleigh face threats of urban sprawl and gentrification.3. Trump issued a series of executive orders aimed at reshaping the American education system. They examine redirecting federal funds to private schools that align with the president's politics, and changing curricula. It's unclear how his plans will be implemented, and the orders will likely face legal challenges. Still, they could have "a chilling effect" on schools, one education expert told BI.In other newsTrump's calendar: When tariffs, RTO, buyouts, and a TikTok cut-off are set to go into effect.Exxon Mobil CEO says natural gas can meet surging data center demand on a faster timeline than nuclear power.The list of CEOs voicing support for their companies' DEI initiatives is growing.Mark Zuckerberg said he has no plans to change Meta's hybrid work policy: 'The status quo is fine.'What's happening todayPresident Trump speaks with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, following his tariffs order.Court hearing in lawsuit filed by Blake Lively against costar Justin Baldoni.Israel and Hamas expected to begin phase two of ceasefire talks.Blue Origin New Shepherd rocket launch.The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.
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