Part 7/11:

Notably, the R1 model functioned more as an enhancement over V3 rather than a groundbreaking next step in AI evolution. It primarily integrated reinforcement learning—a technology many AI firms are already employing.

The Market Reaction and Misleading Narratives

The stark disparity between the reality of Deep Seek’s advancements and how they were portrayed received attention as the market responded to the hype surrounding R1. Investors began a wave of sell-offs on tech stocks, propelled by a misleading narrative that overemphasized an incremental development while leading to an exaggerated evaluation of economic innovations within AI.