It’s going to be a rough day in the US equity market, particularly the Nasdaq.

The chip bubble may be popping because DeepSeek released a model on par with ChatGPT that was far cheaper to build and to operate. The cost is something like 3% and it didn’t use the latest generation of H100 Nvidia chips (though some doubt they’re telling the truth).

The takeaway is that we’re still going to get AI, it just won’t take as many chips, as much spending or as much energy. That would upend many of the biggest momentum trades in markets.

I outlined all of this on Tuesday but over the weekend, the talk around it snowballed as more people tried and tested DeepSeek while grappling with the implications.

The instinct is to sell every and ask question later. Nasdaq future are down 3.5%. I think it’s far-more nuanced (it always is) but huge moves like this in a momentum trade are often turning points in markets.