A Chinese startup called DeepSeek, that’s only been operating for 12 months, has developed an AI model at a cost of a mere $5.6 million, a fraction of the billions of dollars poured into AI development by US-based tech companies.
This shock development sent shares in US tech companies plummeting – for example, shares in NVIDIA, a leading supplier of AI chips, fell in value by almost $600 billion in a single day – by far the largest drop in share value in history.
The value of Meta and Google shares also fell sharply, as well as a flow-on effect impacting energy companies, Bitcoin and other crypto currencies, which all tumbled in share value.
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DeepSeek AI
Reports are suggesting that the China-based DeepSeek is at least as capable as more established AI models costing billions of dollars to develop and, the fact that DeepSeek AI has been developed for a fraction of the cost, now has analysts questioning whether that massive investment will eventually lead to profits or come down to a case of overspending. And the stock market has reacted accordingly.
BOTTOM LINE:
In my opinion, the stock market has hugely overreacted. We all know how volatile share prices can be with even the mere hint of an adverse rumor often sending share prices tumbling. Plus, there are other factors that I believe come into play:
- Everyone is taking the Chinese company at its word that the cost was so low – no one has disputed it. This means that everything to date has been predicated purely on trusting the word of a relatively unknown company
- The US has years of progress behind its AI development compared to DeepSeek’s mere 12 months, which must give US companies a huge advantage
So, I very much doubt that we’ll see a massive consumer shift away from the established US companies in favor of a 12-month old Chinese startup. Nonetheless, the race is on and I guess, as is the case with many things, time will tell.
Finally, I must say that seeing the likes of Meta and Google hit hard in the wallet is somehow quite pleasing.
UPDATE:
Since writing this article the Australian government has announced that DeepSeek AI has been banned from all government systems.
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Hi Jim
Yes I agree that something smells very fishy about the way the Chinese have “suddenly” developed an Ai system to rival ChatGPT and others for a fraction of the cost. I suspect sooner or later we will hear something that tempers this achievement considerably. In the meantime I wish I had some money for NVidia stock at the bargain price compared to before the announcement. You still need chips to run the Ai on !
Cheers
Reg
PS Off topic but in case you find it useful ! Delete it from my above comment if you wish. I would have added to this weeks topic tips but there was nothing applicable. I also looked for an email address to send this to you but couldn’t find one. Anyway here is something I just posted on the Forum however I doubt many will see it there before the opportunity to download and use this fantastic piece of software to download all your Google Photos expires ! I have been looking for something like this forever ! Cheers Reg
“I am sharing this information for those that use Google Photos like I did and have a gazillion photos stored there with no easy way to get them off in bulk.
I generally use software called SyncBack Free which as it’s name suggests is a free synchronisation software that can automatically backup, synchronise or mirror files and folders on your system including to and from my NAS network, Dropbox and Google Drive folders etc. It is brilliant for a free product, has never let me down and has safeguards such as being able to run virtual backups before you commit to them etc.
So I had about 38,000 photos stored in Google Photos with no easy way to get them onto my local hard drives to reclaim my Google allocated space for emails, photos and Google Drive documents. I was all set to have to set the photos up into albums and then download them laboriously using the Google recommended method.
That was until I recently I got an publicity email from the Company who owns Syncback Free, 2BrightSparks.com. This stated that due to changes in the way Google Photos works their paid software, Syncback Pro, will no longer work to bulk download Google Photos after 31 March 2025. At this I pricked up my ears and upon investigating their software found that they allow a fully functional 30 day trial version for their Pro product. Needless to say I fired it up, inserted my Google info into the software and within a few minutes I was downloading (slowly) every single Google Photo and video onto my hard drive (which I rapidly backed up elsewhere to my NAS). It took about 24 hours solid to get all my 38,000 photos downloaded out of Google Photos but the download itself went flawlessly.
So if you have all your photos on Google Photos like I did (blindly believing what Google originally told you and later walked back – that you would have unlimited photo storage for life) here is a way to get all your photos off whilst you still have time to trial the free and unlimited product.”