China’s DeepSeek unveiled a preview version of its much-anticipated new model on Friday, promising to rival models from OpenAI, Anthropic and Google a year after the then little-known start up took the global AI industry by storm.
The Hangzhou-based company highlighted major upgrades in the new model V4’s reasoning and agentic abilities that could act autonomously on one’s behalf, like writing code. It also boasted new capabilities that enhance the model’s efficiency in processing larger numbers of tokens, the fundamental units of information which AI models use to comprehend instructions.
DeepSeek became the poster child for China’s AI boom after its groundbreaking 2025 release of the R1 model that delivered near industry-leading performance – for allegedly a fraction of the price.
The breakout success tumbled American AI stocks, raising questions about the ever-larger investments into data center buildouts. At the same time, it bolstered confidence in Chinese technology and heated up the tech race with the US.
But analysts said the new model is unlikely to send markets into the kind of frenzy the previous one did.
“R1 shocked US markets because no one expected a Chinese model to compete at that level. V4 is simply a follow-through on that same trend, and trends don’t make headlines the way shocks do,” said Ivan Su, senior equity analyst at financial services firm MorningStar.
The stock market has already priced in the reality that Chinese AI, like DeepSeek, is competitive and cheaper to use than US alternatives, so market reaction this time will be limited, Su added.
Like DeepSeek’s earlier models, V4 is open source, meaning it is available for anyone to use, unlike most American models. The “open” strategy has been one key channel through which China aims to compete with the US, by rapidly scaling up adoptions and rolling out real-life applications in various sectors from e-commerce to robotics.
That strategy also reflects the relative smaller pockets of Chinese AI firms and constraints in accessing cutting-edge chips under Washington’s export controls.
