China's DeepSeek triggers global tech sell-off

The emergence of DeepSeek, a Chinese AI model, is causing a stir in the global tech industry. Created by a Chinese hedge fund manager, DeepSeek is outperforming U.S. tech giants and is now the top app on Apple, overtaking ChatGPT. This development is putting pressure on U.S. tech companies, with Nvidia's stock down by more than 12%. The efficiency of DeepSeek, which runs on less advanced Nvidia chips, is being hailed as a major breakthrough. The open-source nature of DeepSeek raises questions about the future of AI dominance and the potential for a paradigm shift in the tech industry.

Takeaways

• 😀 DeepSeek's AI model is causing a global tech sell-off, significantly impacting U.S. tech stocks.
• 😀 The model is more efficient and runs on less advanced Nvidia chips, marking a major breakthrough.
• 😀 DeepSeek's app has overtaken ChatGPT on the Apple App Store, highlighting its popularity and effectiveness.
• 😀 The development of DeepSeek is being taken very seriously by global leaders, as mentioned at the World Economic Forum in Davos.
• 😀 DeepSeek's model is on par with the best American models, posing a geopolitical challenge for the U.S.
• 😀 There is speculation that DeepSeek may have used high-performing Nvidia chips, which they were not supposed to have.
• 😀 The efficiency and human-like reasoning of DeepSeek's model are being praised, with some expressing awe and even fear at its capabilities.
• 😀 The rise of open-source models like DeepSeek is causing a paradigm shift in the tech industry, with companies exploring more cost-effective alternatives.
• 😀 Microsoft's shares have dropped, raising questions about the company's $80 billion investment in AI and whether they might adopt DeepSeek.
• 😀 The Jevons Paradox is mentioned, suggesting that as AI becomes more efficient and accessible, its use will increase, potentially turning it into a commodity.

Q & A

What is DeepSeek and why is it significant?

DeepSeek is a Chinese AI lab that has developed a new AI model which is more efficient and runs on less advanced Nvidia chips. It is significant because it is outperforming American models and has the potential to disrupt the global tech industry.

How has DeepSeek impacted the global tech market?

The emergence of DeepSeek has triggered a sell-off in global tech stocks, particularly affecting companies like Nvidia, ARM, AMD, Microsoft, and Meta. Nvidia's stock has dropped by more than 12%.

What is the current status of DeepSeek's app?

DeepSeek's app is currently the number one app on Apple's App Store, overtaking ChatGPT.

Who created DeepSeek and why is it capturing attention?

DeepSeek was created by a Chinese hedge fund manager. It is capturing attention because its AI model is on par with the best American models and is more efficient.

What are the geopolitical implications of DeepSeek's development?

If the United States cannot lead in this technology, it could be in a bad geopolitical position. China's advancement in AI could challenge American dominance.

What is the Jevons Paradox and how does it relate to AI?

The Jevons Paradox refers to a situation where technological progress increases the efficiency of resource use, but the reduced cost leads to increased demand, resulting in higher overall resource consumption. In the context of AI, as it becomes more efficient and accessible, its use is expected to skyrocket, turning it into a commodity.

How are companies reacting to the rise of open-source AI models?

Many CEOs are experimenting with open-source models like Lama to replicate functionalities of proprietary models like OpenAI's, aiming to reduce costs and gain more control over the technology.

What are the potential challenges for companies like Microsoft in the face of DeepSeek's rise?

Companies like Microsoft may need to reconsider their investments in AI, such as the $80 billion deal with OpenAI, and explore more cost-effective and efficient alternatives like DeepSeek.

What is the significance of DeepSeek being open-source?

The open-source nature of DeepSeek allows users to test and adapt the model themselves, potentially leading to a paradigm shift in how AI is developed and used globally.

How might the rise of DeepSeek affect the future of AI development?

The rise of DeepSeek could accelerate the democratization of AI, making it more accessible and affordable, while also prompting a reevaluation of current AI strategies and investments by major tech companies.

Outlines

00:00

😀 Deep Seek's Impact on the Tech Industry

The emergence of Deep Seek, a new AI model, is causing significant disruption in the tech industry. It is more efficient and runs on less advanced Nvidia chips, which is putting pressure on major U.S. tech companies. Deep Seek, created by a Chinese hedge fund manager, is gaining attention and is currently the top app on Apple, overtaking ChatGPT. The model's performance is on par with the best American models, raising concerns about the U.S.'s geopolitical position if it cannot lead in this technology. The script discusses the potential use of high-performing Nvidia chips by Deep Seek, which they were not supposed to have, and the implications of this for the tech industry. It also touches on the open-source nature of Deep Seek and how it allows for more testing and development by users.

05:02

😀 The Future of AI and Open Source Models

The conversation shifts to the future of AI and the potential shift towards open-source models. The discussion includes the impact on Microsoft, with shares down 6.8%, and the question of whether Satya Nadella will still invest $80 billion in AI. The script explores the idea of using open-source models like Lama, which is free and allows for more control, reducing dependency on Open AI. It also touches on the potential geopolitical implications of China's open-sourcing of AI technology and the challenges it poses to American dominance. The discussion concludes with the Jevons Paradox, suggesting that as AI becomes more efficient and accessible, its use will skyrocket, turning it into a commodity, and raising questions about the long-term investment strategies of companies like Microsoft.

Keywords

DeepSeek

DeepSeek is a Chinese AI startup that has developed highly efficient AI models, such as DeepSeek-V3 and DeepSeek-R1. These models are notable for their performance and cost-effectiveness, challenging the dominance of U.S. tech giants in the AI sector. DeepSeek's models are praised for their reasoning capabilities and have gained significant attention for being open-source, allowing other developers to test and build upon them. The company's success has raised questions about the high investments in AI by U.S. companies and has led to a reevaluation of the AI market[^2^][^3^].

AI Model Efficiency

AI model efficiency refers to the ability of an AI model to perform tasks with minimal computational resources. DeepSeek's models are highlighted for their high efficiency, as they can match or exceed the performance of more established models while using significantly less computing power and cost. This efficiency is a major factor in DeepSeek's models gaining popularity and causing a stir in the AI industry[^1^][^6^].

Nvidia Chips

Nvidia chips are high-performance GPUs used extensively in AI development for their ability to process large amounts of data quickly. DeepSeek's use of Nvidia chips, particularly the H800 and H100 models, has been a topic of discussion due to U.S. export restrictions on advanced AI chips to China. Despite these restrictions, DeepSeek has managed to develop efficient models, raising questions about the effectiveness of such restrictions and the future of AI hardware[^2^].

ChatGPT

ChatGPT is a conversational AI model developed by OpenAI, known for its ability to generate human-like text responses. DeepSeek's models have been compared to ChatGPT, with DeepSeek's R1 model showing comparable performance in many benchmarks. The rise of DeepSeek has led to a reevaluation of ChatGPT's dominance in the AI market and has sparked discussions about the future of AI development[^3^][^8^].

Apple App Store

The Apple App Store is a platform where users can download applications for Apple devices. DeepSeek's AI assistant app has gained significant popularity, surpassing ChatGPT to become the top-rated free application on the App Store. This achievement highlights the appeal of DeepSeek's models to users and developers, and it underscores the potential impact of DeepSeek on the AI application market[^1^][^4^].

Davos

Davos refers to the World Economic Forum held annually in Davos, Switzerland, where global leaders discuss economic and technological trends. DeepSeek's emergence was a topic of discussion at Davos, with industry experts highlighting the company's models as a significant breakthrough in AI. The attention DeepSeek received at Davos contributed to the growing buzz around the company and its impact on the global tech industry[^2^].

Open Source

Open source refers to software or models whose source code is made freely available and can be modified and shared by anyone. DeepSeek's models are open-source, allowing developers worldwide to access, test, and build upon them. This openness has facilitated collaboration and innovation in the AI community and has positioned DeepSeek as a leader in open-source AI development[^3^][^4^].

U.S. Tech Names

U.S. Tech Names refers to major U.S. technology companies such as Nvidia, Microsoft, and Meta, which have been dominant players in the AI sector. The rise of DeepSeek has put pressure on these companies, questioning the high investments they have made in AI and leading to a sell-off in their stocks. The efficiency and cost-effectiveness of DeepSeek's models have challenged the market's perception of U.S. tech dominance in AI[^2^][^7^].

Jevons Paradox

The Jevons Paradox is an economic theory stating that increased efficiency in using a resource leads to increased consumption of that resource. In the context of AI, as models like DeepSeek's become more efficient and accessible, the demand for AI applications is expected to skyrocket, potentially turning AI into a commodity. This paradox raises questions about the long-term investment strategies of companies in the AI sector[^3^].

Reasoning Model

A reasoning model in AI refers to a system that can generate logical and coherent responses by understanding the context and reasoning through the information provided. DeepSeek's R1 model is known for its strong reasoning capabilities, which allow it to tackle complex logical and mathematical problems. This feature sets DeepSeek apart from other AI models and has contributed to its success and recognition in the AI community[^2^][^4^].

Highlights

DeepSeek's AI model is more efficient and runs on less advanced Nvidia chips.

DeepSeek's app is currently the number one app on Apple, overtaking ChatGPT.

DeepSeek was created by a Chinese hedge fund manager and has captured global attention.

DeepSeek's model is on par with the best American models, posing a geopolitical threat to the US.

Nvidia's stock is down by more than 12%, and global chip stocks are also in the red.

There is a question about whether DeepSeek used high-performing Nvidia chips to build their model.

Even if DeepSeek used Nvidia chips, their model is significantly more efficient and better.

DeepSeek's open-source nature allows people to test it themselves.

The emergence of DeepSeek feels like a Sputnik moment for the AI race, with China stepping in.

The cost factors and open-source nature of DeepSeek could change the dynamics of the AI industry.

There is a debate about whether Microsoft will still invest $80 billion in AI given the rise of DeepSeek.

The Jevons Paradox suggests that as AI becomes more efficient and accessible, its use will skyrocket.

DeepSeek's open-source model could lead to a paradigm shift in how companies approach AI.

The question remains whether companies can replicate DeepSeek's model using open-source alternatives.

The rise of DeepSeek highlights the need for the US to take China's technological advancements seriously.