DeepSeek Resets AI Development, Threatening US Tech Stocks
DeepSeek, a Chinese AI company, has upended assumptions about the future of AI development. Snowflake CEO Sridhar Ramaswamy highlights two key implications:
1. Continued Innovation and Competition:
Despite DeepSeek's advancements, Ramaswamy emphasizes that significant innovation potential remains, fostering competition among companies developing language models.
2. Cost Questions for Cutting-Edge AI:
DeepSeek's lower-cost model raises concerns about the need for excessive spending by US companies on AI infrastructure, potentially impacting stock valuations.
Monday's Market Turmoil:
The news of DeepSeek's model triggered a market sell-off, with Nvidia's value plunging by a record $588.8 billion. Morgan Stanley analyst Brian Nowak suggests this decline may lead to faster AI product innovation.
Apple's Potential Resilience:
Nowak remains bullish on Microsoft despite its OpenAI exposure. He views Apple as a potential winner due to its focus on smaller, on-device LLMs with lower capital expenditures.
Rivalry from China:
Ramaswamy warns that DeepSeek's success serves as a wake-up call for investors to monitor developments from its Chinese rivals.