A seismic repricing of global AI valuations is underway as DeepSeek's breakthrough R1 model triggers the largest single-day market cap loss in US history—nearly $1 trillion evaporated overnight, with Nvidia alone shedding $600 billion. The Chinese AI firm, now seeking $300 million at a $10 billion valuation, stands at a fraction of OpenAI's $852 billion and Anthropic's $800 billion valuations, forcing investors to question fundamental assumptions behind America's AI spending boom.

What did DeepSeek do to the market, and can it do it again?

DeepSeek’s R1 release was arguably one of the most disruptive events in the short history of the modern AI industry when it claimed to have trained the model for around $5.6 million, a fraction of the hundreds of millions routinely spent by US laboratories.

Haritha Khandabattu, a senior director analyst at Gartner, reportedly described it as an event that “changed global beliefs about frontier-model cost curves and China’s competitiveness.”

Since that January 2025 shock, DeepSeek has issued seven further model updates, none of which rattled markets with the same force, which has been partly reassuring to US investors. 

However, according to Stanford University’s 2026 AI Index, US and Chinese models have traded the top performance ranking multiple times since early 2025, with Anthropic’s leading model holding an advantage of just 2.7% as of March 2026.

Are OpenAI’s investors right to be nervous?

More voices have been calling out OpenAI’s $852 billion valuation, and the critics are not just outsiders alone. 

The Financial Times (FT) reported that some of the company’s own backers have grown uneasy, pointing to a product roadmap that has been changed twice in six months due to competitive pressures from Google and Anthropic. One early investor reportedly stated that OpenAI was a “deeply unfocused company.”

On the revenue front, OpenAI reported an annualized revenue run rate of $25 billion in February. Anthropic, by contrast, saw its annualized rate surge from $9 billion at the end of 2025 to $30 billion by March, driven mostly by demand for Claude Code.

OpenAI’s new chief revenue officer, Denise Dresser, has disputed Anthropic’s revenue figures, stating that the numbers are inflated by gross-basis accounting on cloud partner revenue, a charge Anthropic denies.

One investor who has backed both companies told the FT that justifying OpenAI’s current valuation requires assuming an IPO price of $1.2 trillion or more.

Will the bottom fall out on the AI valuation market?

In the first quarter of 2026, just four deals, OpenAI, Anthropic, xAI, and Waymo, accounted for 63% of total capital raised, with a growing number of voices warning that extreme valuations may reflect speculative appetite and not actual revenue-generating capability.

Elon Musk’s combined SpaceX-xAI entity is targeting a public listing at a valuation that analysts suggest could exceed $1.75 trillion, potentially making it the largest IPO in market history.

On the other hand, DeepSeek’s ask of $300 million at a valuation of $10 billion looks almost unbelievable given its size and also considering that OpenAI, Anthropic, and SpaceX are collectively looking at valuations that presuppose they will be worth trillions.

Some quarters also attribute the modest valuation to the consideration of the current market realities for a Chinese company. 

Despite this, the valuation gap is too big to ignore, and this time around, it is raising questions that are not aimed at DeepSeek’s credibility but at the credibility of everything priced above it.

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