Another "DeepSeek Moment" is coming?

In the past two days, a major event has occurred in the tech industry: Google announced its AI memory compression technology, TurboQuan.

According to Google, TurboQuant can significantly reduce model size without any loss of accuracy, making it highly suitable for supporting key-value cache compression and vector search. Google claims that TurboQuant can reduce the size of key-value memory by at least six times.

Cloudflare CEO Matthew Prince and others called it Google’s “DeepSeek moment,” believing it has the potential to, like DeepSeek, greatly lower AI operating costs through extremely high efficiency while maintaining competitive results.

After the news of TurboQuan broke, Silicon Valley tech circles exploded. The stock prices of Micron Technology and SanDisk in the US, Samsung Electronics and SK Hynix in South Korea all temporarily plummeted, and the storage sector in the A-share market also saw adjustments today.

However, Wall Street investment banks remained relatively calm. Some analysts questioned the “disruptive” nature of this technology and pointed out that media reports may have exaggerated its impact.

Morgan Stanley noted that TurboQuant only affects key-value caches during inference, with no impact on model training or the high-bandwidth memory used by model weights. This technology reshapes the cost curve of AI deployment and has a long-term neutral to slightly positive signal for computing power and memory hardware.

Regarding Google’s “DeepSeek moment,” I think it might be somewhat exaggerated.

For example, DeepSeek emerged around the Chinese New Year 2025. At that time, the market believed that DeepSeek would reduce overseas computing power demand, but in reality, demand actually increased.

However, the impact of TurboQuan has not ended. As of 4:30 PM today, US chip and storage stocks pre-market generally declined, with SanDisk down nearly 4%, Micron and Western Digital down close to 3%, and Seagate Technology down over 2%.

Let’s return to the market.

Today, the three major indices in the A-share market all declined. The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index all fell more than 1%.

Market turnover was only 19,571 billion yuan, shrinking by 2,359 billion yuan compared to yesterday. Most stocks declined, with only 916 stocks rising, and the median change in stock prices was a decline of 1.63%.

Overall, the market’s decline exceeded my expectations, but the retracement level was within the expected range.

The Shanghai Index not only filled yesterday’s gap but also retraced near the 38.2% Fibonacci level of this week’s wave, which I mentioned in yesterday’s article.

In general, today’s correction was beyond my initial forecast, but the retracement level was as expected.

Since the Shanghai Index not only filled yesterday’s gap but also retraced near the 38.2% Fibonacci level of this week’s wave, today’s low point is very critical.

There are two points to note:

First, if tomorrow the Shanghai Index remains above today’s low throughout the day, it would still be within a rebound process. If there is a gap down tomorrow and the gap is not filled during the day, it indicates a risk of a second bottom.

Between these two scenarios, I lean toward the first—that the rebound cycle is not over and there is still room to go. But if the second scenario occurs, it would be prudent to reduce positions accordingly.

Looking at the recent market trend since the beginning of the year and since March, many people have experienced losses, and trading has been quite challenging. This is supported by two points:

One, the number of stocks rising and falling: from March to now, there have been 19 trading days, but on 12 of those days, the number of declining stocks was around or below 2,000.

Two, market sentiment indicators: since mid-January, the insurance and securities sectors have been adjusting continuously, with no significant rebounds during this period.

Therefore, even if the rebound cycle is not over, it is still not advisable to hold overly heavy positions or chase gains and sell on dips.

In the context of market correction, defensive sectors are re-emerging.

First, market turnover hit a new low since December 26, 2025.

Second, defensive sectors such as oil, coal, banking, gas supply, and heating performed relatively well today, while the two main recent themes—electric power and AI hardware—also saw adjustments.

As of 5 PM, international crude oil prices continued to rise, with WTI futures up over 3%. If oil prices continue to rise, watch out for a possible seesaw effect between oil and tech stocks.

In AI hardware, core and leading stocks surged last year, while second-tier stocks started to gain momentum this year. However, mid- and lower-tier stocks did not show a broad rally; instead, their movements are driven by performance, industry trends, new technologies, and “small stories,” resulting in larger fluctuations.

In the power sector, yesterday’s surge was followed by today’s divergence, which is normal. Currently, the power sector is mainly driven by themes and narratives.

The lithium industry chain is strengthening, with the strongest performance from stocks expected to see product price increases in the second half of 2025.

Guojin Securities states that lithium battery production significantly rebounded in March, maintaining high industry chain prosperity. Production across all segments has been fully adjusted upward as the post-holiday season effects fade. Downstream demand for inventory replenishment, cautious in February, has begun to transfer upward, driving the entire industry chain into a recovery phase.

CITIC Securities notes that the electrolyte sector is experiencing price increases and performance realization, with optimism for solvent, VC, and 6F prices and volumes rising together. Specifically, in solvents, raw materials like ethylene and propylene have driven excess price increases; in VC, Fuxiang Pharmaceutical’s first-quarter performance surged, indicating smooth performance realization in the VC industry. With the peak shipping season approaching and order delivery prices, VC manufacturers are expected to see continued high growth in Q2; for 6F, industry inventory is near bottom, with strong price support.

Some stocks like humanoid robots (300024) and certain commercial aerospace stocks showed temporary movements today, mainly driven by news, but all declined due to overall market influence. In my view, the former’s story is old, and the latter’s recent gains were too large.

Finally, a summary: today the market filled yesterday’s gap, but the low point was right at the 38.2% retracement of this rebound wave, suggesting the rebound cycle may not be over. However, if tomorrow’s daily K-line gaps down, it’s advisable to control positions.

From recent trends, whether in AI hardware or lithium batteries, performance is key to attracting funds. Therefore, paying attention to performance fundamentals, especially for themes like price increases and stocks that start to realize gains after price hikes, is crucial.