Global equities markets reacted violently to news that China's DeepSeek AI model outperformed those of Wall Street's top names. In testing, DeepSeek is on par with OpenAI and Facebook (Meta) , and with the best models from Google, Amazon, and Oracle.
Many analysts conclude that the big advancements in Artificial Intelligence will shift, to favor low-cost, open-source models using DeepSeek's framework, and that the hundreds of billions already invested in expensive, proprietary models will be written off. Further, that future ambitious projects, such as the $500 billion Stargate program, will be shelved.
But this ignores how Western markets and industries function. There is too much capital already deployed, and too much more already committed, for Big Tech to step aside and make way for a free model. The only recourse for Wall Street and Silicon Valley, to protect the trillions of dollars in shareholder equity and their future cash flows, is to persuade Western regulators to ban DeepSeek, and craft rules that preclude open-sourced AI models.
In the rest of the world, the best AI will be accessed by developers, companies, and casual users for free. But in the US and Western Europe, our policymakers will revert to form, and restrict technologies and products that threaten the profit margins of our biggest firms.
Resources and links:
Venture Beat, Open-Source DeepSeek R1 uses Pure Reinforcement Learning to match OpenAI at 95% less cost
https://venturebeat.com/ai/open-source-deepseek-r1-uses-pure-reinforcement-learning-to-match-openai-o1-at-95-less-cost
CNBC Daily Open: Nvidia plunges as DeepSeek triggers questions on its value
https://www.cnbc.com/2025/01/28/cnbc-daily-open-nvidia-plunges-as-deepseek-triggers-questions-on-its-value.html
U.S. lawmakers in ‘uncharted waters’ as DeepSeek tests limits of American trade restrictions
https://www.cnbc.com/2025/01/28/us-lawmakers-in-uncharted-waters-as-deepseek-tests-limits-of-american-trade-restrictions-.html
Why everyone in AI is freaking out about DeepSeek
https://venturebeat.com/ai/why-everyone-in-ai-is-freaking-out-about-deepseek/
Nvidia sheds almost $600 billion in market cap, biggest one-day loss in U.S. history
https://www.cnbc.com/2025/01/27/nvidia-sheds-almost-600-billion-in-market-cap-biggest-drop-ever.html
Zerohedge, DeepSeek Pulls Rug Out On Nvidia, ASML
https://www.zerohedge.com/markets/deepseek-pulls-rug-out-nvidia-asml
Zerohedge, DeepSink: Global Markets Crash On Cheap China AI Panic
https://www.zerohedge.com/market-recaps/deepsink-global-markets-crash-cheap-china-ai-panic
ZH, The Most Important Chart In The World Right Now
https://www.zerohedge.com/markets/most-important-chart-world-right-now
Bloomberg, DeepSeek Challenges Everyone’s Assumptions About AI Costs
https://www.bloomberg.com/news/articles/2025-01-28/deepseek-ai-platform-brings-a-1-trillion-market-reckoning-on-cost
https://x.com/zerohedge/status/1883318929025884322
Natural gas plant planned for Stargate AI data center campus - report
https://www.datacenterdynamics.com/en/news/natural-gas-plant-planned-for-stargate-ai-data-center-campus-report/
Wall Street Journal, DeepSeek Is Upending Wall Street’s Big AI Power Trade
https://www.wsj.com/finance/stocks/deepseek-is-upending-wall-streets-big-ai-power-trade-0e649925
JP Morgan Research, Is the DeepSeek drama a gamechanger for the AI trade?
https://www.jpmorgan.com/insights/markets/top-market-takeaways/tmt-is-the-deepseek-drama-a-gamechanger-for-the-ai-trade
Auto prices are cooling, but ‘we’re never going back to the old normal,’ expert says. Here’s what car shoppers can expect
https://www.cnbc.com/2024/03/21/new-used-car-prices-are-cooling-heres-what-auto-shoppers-can-expect.html
Pricing, ChatGPT / OpenAI
https://openai.com/chatgpt/pricing/
Reuters Exclusive: Nvidia cuts China prices in Huawei chip fight
https://www.reuters.com/technology/nvidia-cuts-china-prices-huawei-chip-fight-sources-say-2024-05-24/
WSJ, China’s AI Engineers Are Secretly Accessing Banned Nvidia Chips
https://www.wsj.com/tech/ai/chinas-ai-engineers-are-secretly-accessing-banned-nvidia-chips-58728bf3
Seeking Alpha / Bank of America, Nvidia expands reach as most widely owned semi among fund managers
https://seekingalpha.com/news/4392410-nvidia-expands-reach-as-most-widely-owned-semi-among-fund-managers-bofa
Nvidia Becomes Retail Investors’ Top Stock in 2024
https://www.kaohooninternational.com/world/550111
Market Watch, Nvidia beats Apple and Tesla to become the largest holding in average retail portfolio
https://www.marketwatch.com/story/nvidia-beats-apple-and-tesla-to-become-the-largest-holding-in-average-retail-portfolio-d9689de3
Reuters, DeepSeek sparks AI stock selloff; Nvidia posts record market-cap loss
https://www.reuters.com/technology/chinas-deepseek-sets-off-ai-market-rout-2025-01-27/
Closing scene, Foshan, Guangdong