Chinese AI startup DeepSeek has triggered significant volatility in AI stocks, with concerns mounting over cybersecurity vulnerabilities and website crashes. Navellier & Associates raised suspicions that DeepSeek might have been engineered as a short-selling opportunity, rather than a true AI breakthrough.
1. DeepSeek’s Market Shock
- DeepSeek gained rapid U.S. popularity, coinciding with the NFL playoffs, a high-visibility event.
- AI leaders like NVIDIA (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) saw sharp stock declines.
- DeepSeek's cybersecurity concerns and outages have fueled skepticism about its legitimacy.
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2. DeepSeek: A Market Manipulation Tool?
Louis Navellier noted:
"The narrative is that DeepSeek can outperform OpenAI and ChatGPT, but it looks like it was just done to hit the market."
- DeepSeek’s founder, Liang Wenfang, previously built High-Flyer, a quantitative hedge fund.
- China bans short-selling, making it impossible to bet against stocks locally.
- This has led to speculation that DeepSeek was designed to manipulate global markets, allowing traders to short AI stocks, profit, and cover their positions.
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3. Market Implications & Investor Takeaways
- If DeepSeek’s AI claims prove exaggerated, AI stocks may recover quickly.
- If short-selling suspicions hold, regulators may investigate potential market manipulation.
- Investors should watch AI sector fundamentals, rather than reacting to speculative disruptions.
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As AI markets remain volatile, staying informed on earnings, innovation, and regulatory developments is crucial for navigating this uncertainty.
