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AI Market Shakeup
Chinese AI startup High-Flyer made waves last week by unveiling its low-cost AI model DeepSeek – a direct competitor to OpenAI’s ChatGPT. The market’s initial reaction? The tech-heavy Nasdaq 100 shed nearly $1 trillion in value. Dramatic, right? Let’s break it down first.
Back in November 2022, OpenAI launched ChatGPT – a game changer in AI. Nvidia, the mastermind behind AI-friendly graphic chips, rode the wave to a $3 trillion market cap. Since then, tech companies have been pouring billions into AI, hoping these investments will eventually pad investors’ pockets.
Then along comes DeepSeek, the annoying stepsibling, claiming to have built a rival AI model for just $6 million, which is 15% of the cost of a comparable ChatGPT model. That raised some eyebrows. How did China do it so cheaply? While the actual cost is debatable, the news was enough to send Nvidia’s stock tumbling 17%.
Despite the buzz, AI’s long-term potential remains strong. Lower costs could fuel even more innovation, benefiting both established players and new challengers. But if this past week proved anything, it’s that U.S.-China competition isn’t slowing down! Check out last week’s Sight|Lines for a deeper read into the development.
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