The Impact of DeepSeek's Release on Stock Markets in China and the U.S.

This study investigates the stock market impact of the emergence of DeepSeek, a Chinese artificial intelligence firm, on both the Chinese and U.S. equity markets. Employing an event study methodology with an estimation window of 240 trading days and an event window of fifteen trading days, we examine abnormal returns (AR) and cumulative abnormal returns (CAR) of selected technology firms. The findings reveal contrasting market reactions: while Chinese firms, such as Anyka Microelectronics and Meig Smart Technology, experienced significantly positive CARs, U.S. firms, including NVIDIA and Vertiv Holdings, recorded significantly negative CARs. These results suggest that DeepSeeks technological breakthrough enhanced investor confidence in Chinas AI sector but also increased concerns about intensified competition for U.S. market participants. The analysis highlights how disruptive innovations can reshape investor expectations, alter cross-market dynamics, and reflect broader shifts in technological and economic power relations between China and the United States.