Odd Lots
The AI Model That Tanked the Stock Market
Jan 28, 2025
Zvi Mowshowitz, an AI expert and author of the Substack 'Don't Worry About the Vase,' dives into the market turmoil sparked by DeepSeek, a new AI model from China. He explains how DeepSeek caused a staggering loss for Nvidia and other tech giants in just one day. Discussion includes the implications of AI competition and market dynamics, the challenges for established players like Google and Meta, and the ethical considerations surrounding advanced AI. Zvi also touches on the future of AI technology and its financial impact.
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Quick takeaways
- The introduction of DeepSeek has caused a major market downturn, particularly impacting NVIDIA and highlighting fears of increased competition in AI.
- Despite its low reported training costs, creating a competitor like DeepSeek entails substantial investments in data and infrastructure, complicating its actual affordability.
Deep dives
Impact of DeepSeek on Market Dynamics
The introduction of the DeepSeek AI model has significantly impacted the financial markets, particularly for companies heavily invested in AI, such as NVIDIA. Following the release of DeepSeek, NVIDIA's stock saw a sharp decline, dropping by 17% in a single day. This reflects the market's concern over a low-cost, high-performance competitor that poses a challenge to established players in the AI sector. The situation illustrates a growing unease around tech concentration and the rising influence of inexpensive alternatives in a landscape where many companies have staked their futures on AI.
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