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Two months, $10 million, and a team of less than 200 engineers.
That’s all it took for one Chinese company most of us had probably never heard of to trigger an existential panic in the AI race.
Back in January 2025, DeepSeek managed the unthinkable. The startup significantly reduced training expenses for their R1 AI model at a time when spend among top players from OpenAI to Anthropic was already surpassing the GDP of several small countries.
And here’s the kicker: DeepSeek built their models using weaker chips—way weaker.
China had trade restrictions on their AI chip exports. So they made do with what they had. And it worked.
Needless to say, DeepSeek’s massive breakthrough wasn’t welcome news for incumbents like Nvidia.
Within days of DeepSeek’s rollout, Nvidia shares lost over $600 billion in market value. That’s still the largest single-company decline in U.S. stock market history.
And the news wasn’t much better for players like AMD, Google, and Microsoft. More billions were wiped off the board in a matter of days.
True, all these companies still command the largest share of the AI market today. Even Nvidia has mostly recovered from the shock.
But DeepSeek was a warning of something much bigger coming down the pike.
The Stadium View Problem in AI
For years, everyone in the AI space was convinced you needed a massive, expensive, sprawling operation to build intelligent models.
That came straight from a 2017 Google white paper on transformers. The conventional wisdom was simple—more data, more compute power, bigger chips, bigger budgets.
By 2025, the industry had poured over $252 billion into global AI investment. We’re talking about massive data center buildouts, the most cutting-edge hardware on the planet, and teams of researchers getting paid Fortune 500 salaries.
The dogma was locked in: More money = Better AI.
Then DeepSeek came into the picture and upended years of conventional wisdom around the development of AI.
They proved you could build a comparable model with efficiency, smarter engineering, and less waste.
Sound familiar? Think about what happened with Blockbuster and Netflix. Or how cloud computing disrupted entire industries. Every major shift follows this pattern:
The incumbent players believe in their old playbook. Then someone comes along with a better system. And suddenly, everything changes.
That’s the exact moment we’re living through right now as the next wave of AI investment takes shape.
And rather than sitting on the sidelines, I want to clue you into where the next major opportunities in tech are forming right now.
Because just like DeepSeek stoked massive volatility in AI stocks last year, I’m seeing a whole range of potential new trade setups extracted from the same playbook.
That’s why I’m putting together a special presentation with my friend and colleague Marc Chaikin. We’re showing you one system that analyzes more than 20 different factors—technical and fundamental—and turns all that noise into something simple: Bullish. Neutral. Bearish.
We call it the Convergence Trigger. It’s all in the special webinar we’re hosting on May 28th at 8PM EST. You can reserve your spot for it right here.
Now, let me show you why DeepSeek’s big breakthrough is turning the entire AI race on its head.
Here’s What MIT Just Confirmed
In October, MIT (the university) dropped some research that should’ve made every AI investor sit up and pay attention.
Their conclusion? The massive, computationally intensive models from OpenAI and Anthropic are hitting diminishing returns. You can keep throwing money at bigger models, but the performance gains are slowing down.
Meanwhile, smaller, more efficient models running on modest hardware—exactly what DeepSeek pioneered—will keep getting better.
That’s not just a technical shift. That’s a market shift. And it’s reshaping which AI stocks win and which ones get left behind as I write to you.
When the DeepSeek story broke, my first instinct wasn’t to panic-sell my tech holdings. It was to dig deeper.
I went live on Masters in Trading to break down what was really happening. Because here’s what I know: Most traders don’t see the actual catalyst. They see the headlines. Then they react.
But the real money is made by those who anticipate.
The real question isn’t whether AI will grow from here. The question is: Which companies are building the next wave of AI?
It’s not just the big names everyone knows. It’s the platforms making AI faster, cheaper, and more accessible.
It’s the companies cutting out the GPU bloat. The players reducing compute costs. The innovators who figured out the efficiency game.
Headline names like Nvidia and Taiwan Semiconductor have had an incredible run. But if efficiency improves—and MIT researchers just told us it will—the demand for expensive, high-end hardware could face real headwinds.
That creates an opening. And that’s where the smarter money flows.
The AI Trades That Broke Through the Noise
When Chinese tech stocks were beaten down, I called JD.com as my Trade of the Day on my free daily show, Masters in Trading LIVE.
For those who don’t know, JD is an Amazon-like retail giant developing its own full stack AI solution to fuel everything from purchases to recommendation algorithms.
My thesis was straightforward: President Trump was heading to China. And I firmly believed he wasn’t traveling to Beijing to deliver bad news. That meant market-supportive outcomes for beaten-down Chinese tech names.
We didn’t have to wait long. The Shanghai Composite opened strong on Monday, led by a rally in Chinese tech stocks. Within days, that trade hit double digits.
But here’s what I love about this setup—we weren’t just getting lucky. We were using volatility strategically. We identified the catalyst, positioned before it hit, and rode the move.
Then came Advanced Notice on the iShares Expanded Tech-Software ETF (IGV)—essentially your play on the biggest Chinese tech stocks like Baidu and lots of other players in the space.
I recommended it in early May. Two weeks later? We were up 8%. Our structured trade delivered exactly what we needed.
The pattern here is crucial: We use volatility to build winners. We don’t run from it.
And that volatility is only going to increase as this next wave of AI stocks reshapes the landscape.
That’s why I’m focused on three areas where better models, faster iteration, and more data can fundamentally change outcomes — AI-powered drug discovery, precision medicine, and energy.
AI drug discovery names like Recursion Pharmaceuticals (RXRX), Relay Therapeutics (RLAY), and Absci (ABSI) are building platforms where AI sits at the center of the discovery process.
Of course, this infrastructure only works if you have large datasets that can be used to train and validate these systems. That’s where another stock I’m tracking, Tempus AI (TEM), comes in.
TEM is building one of the largest clinical data libraries in precision medicine — spanning oncology, diagnostics, and genomics. This is continuously expanding, structured, and tied to real-world outcomes, which makes it significantly more valuable for training models.
The more data you have, the better the models become. The better the models become, the more useful they are in clinical settings.
Training and running these systems requires massive amounts of power. Data centers are already seeing increased demand, and that trend is only accelerating as models grow more complex.
That’s where names like Bloom Energy (BE), Itron (ITRI), and Array Technologies (ARRY) come in. Each of these players is focused on on-site energy generation, particularly for data centers that need reliable, scalable power.
Each of these picks represents an opportunity to make a land grab in the AI build-out.
Of course, you’ll notice none of these picks besides JD are Chinese stocks. And there’s a reason for that.
Unless you’re trading stocks like Baidu or JD.com, many of those picks aren’t investable right now. But there’s a handful of tradeable names that are accelerating the next phase of scalable AI as I write to you.
And there are many more startups angling for public listings – some domestic, some in other markets like China. That means a whole range of asymmetric trade setups that come right along with them.
The Land Grab That’s Happening Right Now
China’s been building an AI empire quietly for years.
Shanghai’s Pudong District alone has 600+ AI companies across foundational, technical, and application layers. Their combined market value? Around 91 billion yuan.
China is now producing AI startups faster than Silicon Valley.
The infrastructure is there. The talent is there. The capital is flowing. And most Western traders have absolutely no idea.
As these next-wave AI players hit public markets, we’re going to see volatility spikes. Earnings surprises. Sector rotations. The kind of conditions where small-cap plays become the most effective trade setups for smart traders.
This Is Why I’m Calling The Convergence
I’ve been running the numbers with my colleague Marc Chaikin, and what we’ve discovered is nothing short of a major shift taking shape across tech.
Here’s the reality: My expertise is finding volatility-based trade setups. Marc’s genius is in predicting direction. He reads options like a book—he can forecast whether the next bullish or bearish leg is about to break out.
Together, we’ve built a new system that analyzes more than 20 different factors—technical and fundamental—and turns all that noise into something simple: Bullish. Neutral. Bearish.
When we apply this to the current wave of AI stocks, we can identify exactly where volatility is going to hand us profitable moves.
And at the world premiere of The Convergence Trigger on May 28th, you’re going to see it with your own eyes.
The markets are shuffling the deck right now. The old AI playbook is breaking down. The new players are emerging. And the traders who position themselves before the masses move in are the ones who will make the real money.
This event is for everyone—whether you’ve been following my work at Masters in Trading, Marc’s research at Chaikin Analytics, or just walking in off the street.
You’re going to see how two plus two actually equals five when you combine the right tools with the right timing.
Remember: The creative trade wins.
Mark your calendar now and make sure you’ve secured your spot before the event goes live. Join us on May 28th by clicking here to reserve your seat now.
Jonathan Rose
Founder, Masters in Trading
