To The Moon

In the span of just a few days, Chinese startup DeepSeek has roiled global stock markets with the launch of its latest artificial intelligence models.

DeepSeek professes they are on par with or better than industry-leading models in the US.

At just a fraction of the cost, it has led to steep declines for AI leader & chipmaker $NVIDIA(NVDA)$ shares and other AI-related chip stocks. (see below)

How they tumbled on Mon, 27 Jan 2025: (see above)

Are you surprised (as was I) that the biggest “loser” was not Nvidia but $Marvell Technology(MRVL)$ and $Broadcom(AVGO)$ - where both are critical infrastructure providers for the rapidly growing AI ecosystem.

Thankfully after a day of ingestion and reflection, Technology stocks rebounded on Tue, 28 Jan 2025, recovering their footing one day after China’s DeepSeek triggered a bruising selloff of stocks tied to artificial intelligence (AI).

For Monday’s top 4 affected AI-related stocks, it is not a full recovery yet:

• MRVL is still off by -15.57%, harking back to early December 2024 pricing.

• AVGO is still off by -14.83%, around its mid-December 2024 pricing.

• NVDA is still off by -8.04%, back at its 18 Dec 2024 pricing.

• $Taiwan Semiconductor Manufacturing(TSM)$ is still off by -8.08%, going back to its 15 Jan 2025 pricing.

Slap In The Face To Trump’s Stargate?

Was DeepSeek’s big reveal strategically planned and a slap in the face to Mr Trump’s private sector mooted - Stargate project, billed at $500 billion (over 5 years), that he so confidently announced after his 20 Jan 2025 inauguration ?

To which, he has Hobson’s choice but to call the cost efficient Chinese AI model a "wake-up call" for US firms.

On Mon, 27 Jan 2025 - DeepSeek's AI assistant became the No #1 most downloaded free app on Apple's istore, propelled by curiosity about the ChatGPT competitor.

DeepSeek’s Stir.

Here’s what is known so far:

• DeepSeek has 2 models of its AI-chatbots.

• They have been “praised” by Silicon Valley executives and US tech company engineers, on their performances that have been deemed to be on par with OpenAI and $Meta Platforms, Inc.(META)$ Meta's most advanced large language model, known as Llama 3.1.

• One of the 2 available models is 20x to 50x cheaper to use than an OpenAI model, depending on the task.

• Importantly, what is worrying to some US tech industry observers is (a) the idea that the Chinese startup has caught up with the American companies at the forefront of generative AI and (b) at a fraction of the cost only.

• Then the real concern sets in, that is it calls into question the huge amounts of money US tech companies say they plan to spend on the data centres and computer chips needed to power further AI advancements.

Rise of Chinese AI Engine ?

While the impact on US AI chip stocks is immediate and dramatic, it is the innovation that showcases the growing sophistication and competitive edge of Chinese tech entities.

Below are possible reasons on why DeepSeek is powerful, as well as controversial:

(1) Cost Efficiency:

• DeepSeek developed its AI model using significantly cheaper and less powerful chips compared to its US counterparts.

• This has raised doubts about the necessity of huge investments in AI infrastructure?

(2) Resilience Against Sanctions:

• Despite US export controls and increasing tightening restrictions, DeepSeek managed to create a high-performing AI model.

• This raises questions about the effectiveness of the US government’s attempts to curtail China’s technological advancements.

(3) Market Impact:

The release of DeepSeek's AI model led to a dramatic sell-off in US tech stocks such as Nvidia and its cohort (see above table), wiping out over $1 trillion in market value over the short span of 1 trading day.

OpenAI CEO B***S**t

With DeepSeek’s unveiling, it also stirred the dust of June 2023 when OpenAI Sam Altman was in India.

Over a Q&A session after a 'Conversations' presentation to India venture capitalists, he was asked “about potential competition emanating from the startup scene, particularly those with only limited financial resources in the range of $10 million“.

His reply then was a dismissive “Look, the way this works is we're going to tell you it's totally hopeless to compete with us on training foundation models. You shouldn't try, and it's your job to try anyway, and I believe both of those things”.

Is it overbrimming arrogance or strategic dissuasion or simply plain ignorance at play ? Will let you be the judge of that.

All I know is when it comes to Technology, “nothing is impossible and nothing is off-limits”, the only thing limiting is one’s knowledge, imagination and abilities.

Immediate Future:

The immediate future holds a volatile environment for tech stocks, particularly those in the AI sector.

Analysts predict that the race for advanced AI will intensify, with heavy investments needed to maintain pace.

The competition will likely spur further innovation, but it also means heightened scrutiny and possible additional measures from policymakers to secure national interests.

These are fascinating times for the AI industry and we are only just beginning.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• US Market Rally to ASML, META, MSFT & TSLA ?

• Tesla's Rise & Fall Hinges on Q4 earnings ?

• Stargate's Winners: ORCL, NVDA, MSFT, ARM

• Do you think Nvidia will be able to dig deep and produce a “cheaper” AI chip soon ?

• Do you think other AI-related US stocks will be able to fully recover (its stock price) in the short term or have to wait a while for calm to be restored ?

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