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 on the latest announcement, stating: "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.
That contrasts with last year, when DeepSeek appeared to leap ahead of domestic peers, driving rapid adoption in China and amplifying its global impact.
Analysts say the earlier shock was driven by a convergence of factors: lofty valuations of U.S. tech firms, expectations of continued dominance by a handful of players, and the emergence of a relatively unknown Chinese startup delivering unexpectedly strong results.
Those conditions are no longer present.
"The expectation that new players will emerge is now baked into valuations," Su said, adding that markets have become more realistic about both the capabilities and limits of AI.
At the same time, competition within China has intensified, with multiple firms releasing increasingly capable models, eroding DeepSeek's relative lead.
On Monday, stock markets in South Korea and Taiwan hit new highs, buoyed by broad optimism for AI-related stocks.
Alfredo Montufar-Helu, managing director at Ankura China Advisors, said the significance of V4 lies less in market impact and more in the U.S.-China race for tech supremacy.
He pointed to DeepSeek's adaptation of V4 to run best on Huawei chips, as tightening U.S. export controls are designed to cut off the Chinese market's access to cutting-edge U.S. chips that power AI model development.
"The 'wow factor' was last year – that's already priced in," he said. "What matters now is whether China can continue advancing on AI development, and potentially do so with its own chips - the geopolitical implications would be significant."