Here’s the thing you need to understand about the artificial intelligence race: it’s exponential, not linear. In a traditional race, the track underneath you doesn’t change in real time. But when it comes to AI, a single innovation can radically transform the field. Think of a poker table, where the deck reshuffles mid-hand.
In January, a little-known Chinese startup called DeepSeek jolted the stock market with a cheaper reasoning model than anyone thought possible. Immediately, AI chip and Big Tech stocks plummeted, the Nasdaq slid about 3%, and Nvidia shed roughly $590 billion in market value—the largest one-day wipeout on record.
Last month, Nvidia published a Nature paper, claiming it trained its flagship “R1” for about $294,000 on export-restricted H800 chips. That’s a suspiciously low number, to say the least. For context, the H800 is a purposely less capable chip in order to get around export controls. Most in the field are quick to dismiss this problem, claiming the U.S. is still well ahead of China. But it’s still prudent to take into account the existence of a competitive, cheap, Chinese model.


