The recent launch of the Chinese AI chatbot DeepSeek has sent shockwaves through the tech industry. The emergence of this new player caused a staggering $1 trillion drop in the leading US tech index. OpenAI’s chief executive, Sam Altman, praised DeepSeek’s R1 version.
@TomOrlik and @D_W_Wilcox have a piece out in Bloomberg this weekend on the AI productivity paradox. As @erikbryn @ChadSyverson and I discuss, we should expand implementation lags (https://t.co/qjjMJdEhVM). Organizations take a long time to change!
Link: https://t.co/471BxmeSGK
— Daniel Rock (@danielrock) February 1, 2025
He noted its impressive capabilities and competitive pricing.
3February: Why are analysts casting doubt on @deepseek_ai's lowball quoted cost for one of its new #AI models? Read about @DeepSeekR1, plus updates on $AKRO, $MTSR, $TECX, & $ETNB in my latest StockWatch for @GENbio: https://t.co/snT6IJBpqZ
— Alex Philippidis (@AlexWestchester) February 3, 2025
This acknowledgment from a notable figure in the AI community suggests that the Chinese product is indeed a formidable competitor. Investors didn’t anticipate such a significant disruption from DeepSeek.
This unpredictability is a hallmark of technology revolutions. It often makes it challenging to determine the right investment strategies.
2-3February: What impact do market watchers say @deepseek_ai will have on @nvidia? What appears to be left out of the Chinese startup's claimed $5.58M cost of developing one of its models? Read about DeepSeek & $NVDA in my latest StockWatch for @GENbio: https://t.co/snT6IJBpqZ
— Alex Philippidis (@AlexWestchester) February 3, 2025
Fund manager Terry Smith recently highlighted the market’s historical inability to consistently identify winners at the inception of technological shifts.
Impact of DeepSeek on Nvidia
He cited examples such as Intel in chips, AOL in internet services, and Nokia in mobile phones. Smith argued that a repeat of this trend wouldn’t be surprising.
The wider economic implications of the AI revolution remain speculative. Post-DeepSeek’s launch, the uncertainty has only heightened. While Nvidia has seen an impressive financial year, the future remains unpredictable.
The vast capital investments in AI echo Warren Buffett’s cautionary tales of the aviation industry. In that case, too much investment spread over too many competitors led to minimal returns. The stock market’s tumultuous response to DeepSeek underlines the inherent challenges in valuing emergent technologies.
While history offers lessons, the path forward in the AI domain remains murky. Investors are navigating uncharted waters in their quest for the next big breakthrough.
