Survey Monday
We’re kicking off the year with the first monthly SA Sentiment Survey for January. Stay tuned for the results and don’t forget to share your thoughts in the WSB comments section!
DeepSeek fears
The artificial intelligence boom has pushed companies to spend billions of dollars to maintain their edge. But the global race has taken a surprising turn, with Chinese AI startup DeepSeek’s large language model outperforming American rivals and stirring up fears of China overtaking the U.S. in the burgeoning new technology.
Backdrop: DeepSeek’s latest LLM – called R1 – has outperformed models from established rivals like Microsoft (MSFT)-backed OpenAI, Meta (META) and Anthropic, which have spent billions of dollars to scale up their LLMs. DeepSeek’s first open-source LLM – DeepSeek V3, released last December – took less than $6M to build, using Nvidia’s (NVDA) H800 chips for training. The R1, built off the V3, is developed to perform complex reasoning and rivals OpenAI’s o1.
Bigger picture: “The new model is cost-effective and runs on reduced-capability chips,” Saxo analysts noted. “The development raises questions about the high valuations of leading AI companies like Nvidia and the investment case for the entire AI supply chain.” Also, DeepSeek’s LLMs have been developed despite U.S. export controls to limit China’s access to the advanced chips needed for AI work. “DeepSeek’s recent progress shows that the perceived lead the U.S. once had has narrowed significantly,” said Alvin Wang Graylin, a tech expert serving as global VP at Taiwanese firm HTC.
On the move: Doubts over U.S. dominance in the AI space, coupled with high stock valuations, dragged the tech-heavy Nasdaq 100 futures (US100:IND) down 4.3% on Monday. Many tech stocks are sliding before the bell, led by AI darling Nvidia’s (NVDA) near 12% drop. Other notable decliners: AMD (AMD) -6.5%, Meta (META) -6%, Amazon (AMZN) -5%, Alphabet (GOOGL) (GOOG) -4%, Tesla (TSLA) -4%. Take the WSB survey here.