China's DeepSeek triggers global tech sell-off

CNBC Television
27 Jan 202508:23

TLDRThe emergence of China's DeepSeek, a new AI model, is causing a stir in the tech industry. It's more efficient and runs on less advanced Nvidia chips, outperforming ChatGPT and becoming the top app on Apple's App Store. This development is putting pressure on U.S. tech companies, with Nvidia's stocks down by more than 12%. The model's open-source nature allows for widespread testing and adaptation, raising questions about the future of AI dominance and the potential for more cost-effective solutions. This breakthrough is being compared to the Sputnik moment, signaling a significant shift in the global AI landscape.

Takeaways

  • πŸ˜€ DeepSeek's AI model is causing a global tech sell-off, with Nvidia's stocks down by more than 12%.
  • πŸ˜€ The model is more efficient and runs on less advanced Nvidia chips, making it a major breakthrough.
  • πŸ˜€ DeepSeek's app is currently the number one on Apple's App Store, overtaking ChatGPT.
  • πŸ˜€ The development of DeepSeek is being taken very seriously by global leaders, as it challenges American dominance in AI.
  • πŸ˜€ There is a concern that DeepSeek API may have used high-performing Nvidia chips, which they were not supposed to have.
  • πŸ˜€ Despite potential issues with chip usage, DeepSeek's model is still significantly more efficient and better.
  • πŸ˜€ The emergence of DeepSeek is being compared to the Sputnik moment, marking a significant shift in the AI race.
  • πŸ˜€ There is a discussion about the cost and investment in AI, questioning whether companies like Microsoft need to spend as much as $80 billion.
  • πŸ˜€ The open-source nature of DeepSeek's model allows for more control and customization, potentially changing the paradigm.
  • πŸ˜€ The Jevons Paradox is mentioned, suggesting that as AI becomes more efficient and accessible, its use will increase, turning it into a commodity.

Q & A

  • What is DeepSeek and why is it significant?

    -DeepSeek is a Chinese AI lab that has developed a new AI model which is more efficient and runs on less advanced Nvidia chips. It is significant because it is outperforming or is on par with the best American models, and it is causing a major shift in the tech industry.

  • How is DeepSeek affecting the global tech market?

    -The emergence of DeepSeek has triggered a global tech sell-off, with stocks of companies like Nvidia, ARM, AMD, Microsoft, and Meta experiencing significant drops. This is due to concerns about the impact of DeepSeek's technology on the market and the potential for it to disrupt existing business models.

  • What is the role of open source in DeepSeek's success?

    -DeepSeek's model is open source, which means that it can be freely used and modified by others. This has allowed for greater testing and adoption of the technology, and has contributed to its rapid growth and success.

  • What are the geopolitical implications of DeepSeek's rise?

    -The rise of DeepSeek has significant geopolitical implications, as it challenges the dominance of the United States in AI technology. If the US cannot maintain its lead in this area, it could face a weakened position in the global tech landscape.

  • How does DeepSeek compare to other AI models like ChatGPT?

    -DeepSeek is currently outperforming ChatGPT and other leading American AI models. It is faster, more human-like in its reasoning, and is able to answer user prompts more effectively.

  • What are some potential concerns about DeepSeek's use of Nvidia chips?

    -There is a concern that DeepSeek may have used a large number of high-performing Nvidia chips, possibly up to 50,000, to build its model. This could raise questions about the legality and ethics of using such chips, as they were not supposed to be available for this purpose.

  • What is the Jevons Paradox and how does it relate to AI?

    -The Jevons Paradox refers to the phenomenon where technological progress increases the efficiency of resource use, but the falling cost of use induces increased demand, leading to an overall increase in resource consumption. In the context of AI, as it becomes more efficient and accessible, its use is expected to skyrocket, turning it into a commodity.

  • What are the implications of DeepSeek's open source model for businesses?

    -The open source nature of DeepSeek's model allows businesses to use and modify it freely, potentially reducing their reliance on proprietary AI solutions like OpenAI. This could lead to cost savings and greater control over AI implementations.

  • How might Microsoft's investment in AI be affected by DeepSeek?

    -Microsoft's investment in AI, including its $80 billion deal, may be impacted by the rise of DeepSeek. The company may need to reconsider its strategy and potentially explore more cost-effective alternatives to achieve its AI goals.

  • What are some potential future developments in the AI industry following DeepSeek's emergence?

    -The emergence of DeepSeek is likely to accelerate the development and adoption of AI technologies worldwide. It may also lead to increased competition and innovation, as well as greater scrutiny of AI's impact on society and the economy.

Outlines

00:00

πŸ˜€ Deep Seek's Impact on the Tech Industry

The emergence of Deep Seek, a new AI model developed by a Chinese hedge fund manager, is causing significant disruption in the tech industry. This model is more efficient and runs on less advanced Nvidia chips, which is putting pressure on major U.S. tech companies. Deep Seek is currently the top app on Apple, surpassing ChatGPT. The model's performance is on par with the best American models, raising concerns about the U.S. losing its dominance in AI. The script discusses the geopolitical implications of this development and the potential for China to take a leading role in AI. It also touches on the financial impact on companies like Nvidia, whose stocks have dropped significantly, and the broader chip industry.

05:02

πŸ˜€ Open Source Models and the Future of AI

The discussion shifts to the rise of open source AI models and their potential to change the industry paradigm. CEOs are exploring open source alternatives like Lama, which is free and offers more control compared to proprietary models like OpenAI. The script questions whether Microsoft, whose shares have dropped, will continue to invest $80 billion in AI or find cheaper alternatives. It also raises concerns about the potential misuse of open source models and the need for companies to adapt to the changing landscape of AI technology. The Jevons Paradox is mentioned, suggesting that as AI becomes more efficient and accessible, its use will increase, potentially turning it into a commodity.

Mindmap

Keywords

πŸ’‘DeepSeek

DeepSeek is a Chinese AI startup that has recently made significant waves in the AI industry. It has developed highly efficient AI models, such as DeepSeek-V3 and DeepSeek-R1, which are on par with or even outperforming leading American models like OpenAI's GPT-4 and Meta's Llama, but at a fraction of the cost[^3^]. This has led to a surge in its app's popularity, making it the top-rated free application on Apple's App Store in the U.S.

πŸ’‘AI model efficiency

AI model efficiency refers to the ability of an AI model to perform tasks effectively while using minimal resources. DeepSeek's models, like DeepSeek-V3, are noted for their high efficiency. They can achieve comparable or better performance than other models while using significantly fewer computing resources and lower costs[^6^]. For example, DeepSeek-V3 was trained using just 2,048 GPUs for 57 days, consuming 2.78 million GPU hours, which is remarkably modest for a 671-billion-parameter model[^6^].

πŸ’‘Nvidia Chips

Nvidia Chips are high-performance GPUs developed by Nvidia, widely used in AI for their ability to process large amounts of data quickly. Despite U.S. export restrictions limiting China's access to advanced Nvidia chips, DeepSeek managed to develop its models using relatively less powerful H800 chips[^6^]. This has raised questions about the necessity and cost-effectiveness of using high-end Nvidia chips for AI development[^8^].

πŸ’‘ChatGPT

ChatGPT is a conversational AI model developed by OpenAI, known for its ability to generate human-like text and engage in natural conversations. DeepSeek's models, particularly DeepSeek-R1, have been compared to ChatGPT and have shown to be competitive in terms of performance and cost-effectiveness[^7^]. DeepSeek's app has even surpassed ChatGPT in terms of downloads and popularity on the App Store.

πŸ’‘Apple App Store

The Apple App Store is a platform where users can download applications for Apple devices. DeepSeek's app has gained significant attention and downloads, becoming the top-rated free application on the App Store. This indicates the high demand and popularity of DeepSeek's AI technology among users.

πŸ’‘Davos

Davos refers to the World Economic Forum held annually in Davos, Switzerland, where global leaders discuss economic and technological trends. DeepSeek's emergence and its potential impact on the AI industry were discussed at Davos, highlighting its significance in the global tech landscape[^2^].

πŸ’‘U.S. Tech names

U.S. Tech names refer to major American technology companies such as Nvidia, Microsoft, and Meta, which have been leading in AI development. The rise of DeepSeek has put pressure on these companies, questioning the high investments and expectations placed on AI technologies[^8^].

πŸ’‘Open Source

Open Source refers to software or models whose source code is made available to the public, allowing for modification and distribution. DeepSeek's models are open-source, enabling other developers to test, build upon, and improve them[^4^]. This has significant implications for the democratization of AI technology and its accessibility to a broader audience.

πŸ’‘Jevons Paradox

The Jevons Paradox is an economic concept where increased efficiency in using a resource leads to increased consumption of that resource. In the context of AI, as models like DeepSeek become more efficient and accessible, their usage is expected to skyrocket, potentially turning AI into a commodity[^2^].

πŸ’‘AI race

The AI race refers to the competition among countries and companies to develop and dominate AI technologies. DeepSeek's emergence has been described as a 'Sputnik moment' for the AI race, highlighting China's significant strides in AI and challenging the dominance of U.S. tech giants[^3^].

Highlights

DeepSeek's AI model is more efficient and runs on less advanced Nvidia chips.

DeepSeek's app is currently the number one app on Apple, overtaking ChatGPT.

DeepSeek was created by a Chinese hedge fund manager and has captured global attention.

The emergence of DeepSeek is putting pressure on US tech names.

DeepSeek's model is top performing and on par with the best American models.

There is a concern that DeepSeek may have used high-performing Nvidia chips they were not supposed to have.

Even if DeepSeek used the chips, their model is significantly more efficient and better.

DeepSeek's open-source nature allows people to test it themselves.

The reasoning and human-like responses of DeepSeek are shocking and impressive.

The development of DeepSeek is being compared to a Sputnik moment for the AI race.

There is a question about whether Microsoft will still invest $80 billion in AI given DeepSeek's emergence.

The Jevons Paradox suggests that as AI becomes more efficient and accessible, its use will skyrocket.

There is a discussion about whether companies can replicate AI models using open-source alternatives like Lama.

The open-source nature of DeepSeek allows companies to have more control and potentially reduce costs.

There is a concern about the geopolitical implications if the US cannot lead in AI technology.