Deepseek 2.0 moment has not arrived: chip stocks stabilize, US stocks await earnings season

On July 21, after the U.S. stock market closed, the chip sector, which had previously been unsettled by Kimi K3, finally caught its breath.

The market's earlier concerns about the "DeepSeek 2.0 moment" did not escalate further. Although SK Hynix still closed down 1.86%, previous star stocks like SanDisk and Micron have turned upward, showing signs of stabilization and rebound. After more than a week of intense selling, the entire semiconductor sector seems to have found a temporary balance point.

Why this time did Kimi K3 not replicate the panic script of DeepSeek 1.0?

1. K3's Narrative Changed: It's Not "Sufficient Computing Power," But "Tight Computing Power"

The reason DeepSeek 1.0 caused a stir last year in March and April was its core narrative of "low cost, high efficiency, and no shortage of computing power"—it trained a model close to top-level performance using minimal GPU resources, directly challenging the investment logic that "AI performance must rely on piling up chips."

However, Kimi K3's story is completely different.

Although K3 shocked the industry with its 2.8 trillion parameters and extremely low inference cost, another side effect after its release is equally noteworthy: tight computing power. The popularity of K3 exceeded expectations, leading to rapid pressure on the inference infrastructure of the dark side of the moon, making computing power expansion an urgent priority.

What does this mean? It means K3 is not proving that "not so many chips are needed," but rather proving that "even with high model efficiency, the speed of demand growth will always outpace supply." This narrative of "tight computing power" is precisely the most favorable support for the chip sector—it makes investors believe again that the demand for AI chips will not disappear due to improved model efficiency; instead, it may continue to expand due to the explosion of application scenarios.

The logic of DeepSeek 1.0 is "efficiency replaces scale," while K3's logic is "efficiency releases demand." These two narratives have completely opposite effects on chip stocks. This is also the fundamental reason why "DeepSeek 2.0" did not unfold.

2. Google's Game Changer: Etching Gemini into Chips

At a critical moment when the chip sector is seeking direction, Google threw out a trump card that could change the game.

Alphabet is developing a brand new AI server chip, codenamed Frozen v2. The design philosophy of this chip is extremely radical: directly writing part of the Gemini model's architecture into the silicon itself.

This is not the traditional "optimizing software to fit hardware," but rather "baking the model blueprint into the chip"—significantly reducing the power consumption and latency of each inference by minimizing the movement of data between computing units and memory.

Google engineers expect Frozen v2's energy efficiency ratio to reach astonishing levels: the number of tokens processed per unit of power could be 6 to 10 times that of the most advanced Ironwood TPU. In comparison, Ironwood is already Google's seventh-generation TPU, and it only doubled the performance per watt compared to its predecessor. The generational leap of Frozen v2 far exceeds any previous chip upgrade by Google.

After the news broke, Alphabet's stock price briefly rose from around $350 to around $359. The market is clearly reassessing Google's long-term competitiveness in the AI infrastructure field—if Frozen v2 can indeed achieve commercial deployment before 2028, Google will have one of the most efficient large model inference infrastructures in the world, making its cost advantage in AI services difficult for competitors to replicate.

However, for the entire chip sector, the significance of Frozen v2 goes far beyond "Google's own business."

It conveys a key signal: AI giants have not slowed down their hardware investments due to improved model efficiency. On the contrary, they are pushing competition to a deeper, more customized dimension—dedicated chips (ASICs). From NVIDIA's general-purpose GPUs to Google's dedicated TPUs, and now to etching model architectures directly into silicon with Frozen v2, the competition in AI hardware is shifting from "who has more cards" to "who's cards are smarter, more efficient, and more specialized."

This shift means that the demand for AI chips will not shrink because "models have become smaller and cheaper." On the contrary, the trend towards specialization and customization will create more diverse and segmented chip demand—this is a long-term benefit for the entire semiconductor supply chain.

3. Earnings Season Challenge: The Next Week Will Determine Direction

Although the chip sector has temporarily stabilized, the test is not over.

In the coming week, core players in the AI supply chain will successively release their quarterly earnings reports. The significance of this earnings season is extraordinary—the market is not only looking at whether the numbers are good, but also at several key questions that will determine whether the AI narrative can continue:

For Google, Meta, and Microsoft, will capital expenditures continue to burn? Can the revenue generated from cloud services and AI services cover the increasingly heavy depreciation, leasing, and electricity costs? If not, the narrative of "AI monetization" will show cracks, and the turning point for capital expenditure growth may arrive sooner than we think.

For SK Hynix, can the money spent by cloud vendors ultimately translate into the ability to raise prices for storage chips, expand market share, and increase profits? Hynix needs to prove in its earnings report that it is a truly profitable link in the AI supply chain, rather than just a "middleman making a margin."

What this round of earnings really needs to look at is not simply whether capital expenditures are "high," but whether they can "continue to exceed expectations." After several consecutive quarters of "surprises," the market's threshold for exceeding expectations has been raised to a very high level. Any marginal slowdown—whether it be a downward revision of guidance, softened wording, or key data falling short of expectations—could become a trigger for a new round of selling.

4. In Conclusion: In the Eye of the Earnings Season Storm, Options Are an Important Anchor

The chip sector is experiencing a highly uncertain window period. Bulls say that K3's tight computing power and Google's Frozen v2 prove that AI hardware demand is far from peaking; bears say that capital expenditure growth is about to peak, valuations are already overstretched, and earnings reports are unlikely to continue exceeding expectations.

In this environment of information fragmentation, betting on a single direction carries far greater risks than potential rewards.

BIT's options feature will officially launch this week, providing a perfectly matched tool for this "direction unclear, volatility intense" market environment:

• Holding chip stocks + buying put options: Insuring positions before earnings reports, locking in downside risk

• Buying call/put options in one direction: Betting on the direction after earnings with funds far below the underlying stock, with maximum loss limited to the premium

• Buying both directions simultaneously: Unsure whether the earnings report will be a surprise or a shock? Bet on both sides, as long as the volatility is large enough, you can profit

The storm of earnings season is approaching. In a market where direction is unclear, those with options are the ones who can remain calm.

Risk Warning: The market conditions, valuation calculations, and product descriptions mentioned in this article are for reference only and do not constitute investment advice. Trading U.S. stocks and their derivatives involves market volatility, leverage, and liquidity risks; short selling may face unlimited loss risks; options trading carries the possibility of total loss of premiums; past performance does not guarantee future returns. Investors should make prudent decisions based on their own risk tolerance and consult professional investment advisors if necessary.