AI Showdown

The Shock and Ripple Effects of DeepSeek in the AI Market

What is DeepSeek?

DeepSeek is a generative AI model, a Large Language Model (LLM) developed in China.
DeepSeek's representative models, R1 and V3, are evaluated to be on par with or superior in performance to leading AI models from American companies such as OpenAI, Google, and Meta.
In particular, DeepSeek has achieved a significant improvement in the efficiency of computing resources, revolutionizing cost-effectiveness. A key feature is that it achieves a similar level of performance to OpenAI's ChatGPT at about 1/10th of the cost.

Background of Founder Lang Wenfeng

Lang Wenfeng, born in 1985, the developer of DeepSeek, is a Chinese national who graduated with bachelor's and master's degrees from Zhejiang University, domestically trained.
Prior to founding DeepSeek, he operated hedge funds and AI research labs, focusing on incorporating AI algorithms into trading systems.
His stated goal is to "lead the growth of the global AI ecosystem through China's original technological innovations."

Is DeepSeek's Technological Innovation Real?

The performance of DeepSeek R1 and V3 has recorded high or comparable scores compared to existing American AI models in various areas such as math skills, language comprehension, and coding tests.
While the cost of training the AI model was approximately 7.9 billion KRW (5.576 million USD), OpenAI spent over 140 billion KRW (100 million USD), highlighting its cost-effectiveness.
The number of chips used in DeepSeek's training process is also significantly lower at just 2, compared to Meta's 16,000, which is being hailed as an innovation.

U.S. Response

Trump described DeepSeek as a "wake-up call" for the United States and declared that he would be laser-focused.
To curb China's pursuit in the AI technology sector, he is expected to further strengthen restrictions on the export of high-performance AI chips and policies to prevent technology leaks.
American companies are also responding. OpenAI's ChatGPT has actively pursued free access in response to DeepSeek.

Skepticism Regarding DeepSeek

Political Intentions
- The emergence of DeepSeek is seen as a strategic announcement by the Chinese government, raising suspicions of political motives in boasting AI achievements.
- In particular, the emphasis on the founder's thoroughly domestic background leads to analysis suggesting it might have been used as an anti-American message.
Technology Theft Controversy
- There are also allegations that some of DeepSeek's core technology was stolen from the American company OpenAI. If true, there could be substantial royalties.
Market Reaction

Immediately after the announcement of DeepSeek, American Big Tech stocks like Nvidia and Broadcom temporarily fell but quickly rebounded. This was interpreted as the market gradually absorbing the DeepSeek shock.

Ripple Effects on the AI Industry

Intensification of AI Competition Among Nations
- The emergence of DeepSeek foreshadows an escalating technological war between the U.S. and China over AI. In particular, the United States is likely to strengthen AI-related regulations to control China's technological rise.
Possibility of Global AI Startup Revival
- DeepSeek’s low-cost AI approach provides the possibility of creating opportunities for more startups to survive in the AI market.
- As the AI adoption rate rapidly rises, new innovations and services are expected to emerge.
Competition to Secure AI Talent

The battle for AI technological dominance ultimately proves once again that it depends on how well the best talent is secured.
Korea also needs to make greater efforts to nurture and secure AI talent.

< Summary >

China's DeepSeek is drawing attention in the AI market for its remarkable cost-effectiveness, putting the United States on edge.
Founder Lang Wenfeng, domestically trained, clearly states his goal of technological independence and growth through AI innovation.
After the announcement of DeepSeek, the United States responded by opening up and making AI technology free and is likely to strengthen regulations on Chinese AI technology.

Although limitations such as political suspicions and plagiarism controversies exist regarding DeepSeek, the intensification of AI competition and rising adoption rates are expected to have clear ripple effects.

[More…]

AI related talent management and startup investment direction
https://nextgeninsight.net/?s=AI
The current status of the AI technology war between the US and China
https://nextgeninsight.net/?s=%EC%A0%84%EC%9F%81

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– AI시장 버블 붕괴될까? 엔비디아와 삼성전자에 줄 충격은? 저비용 AI ‘딥시크’는 쇼인가? 쇼크인가? [즉시분석]

Analysis of Big Tech Performance and Market Reactions

Tesla's Performance and Outlook

Tesla announced results below market expectations (88% decrease in automotive sales, 23% plunge in operating profit), but the stock rebounded as CEO Elon Musk mentioned plans to launch full self-driving (FSD) and robotaxis (June).
After the earnings announcement, the stock initially fell by up to 7%, but surged again after Musk's announcement, surpassing $400.
Past cases have shown that the stock plummeted due to poor performance, then rebounded sharply due to announcements about autonomous driving and new businesses.
Tesla's stock pattern is shifting from car sales to the growth potential centered on software such as FSD and robotaxis.

Apple (AAPL) Q4 Performance and Reaction

Apple recorded slightly better-than-expected earnings per share ($2.4) and revenue ($124.3 billion), but core iPhone sales ($69.1 billion) declined, falling short of market expectations ($71 billion).
In particular, a decline in iPhone sales in China (-11.1%) is a major concern. This is analyzed to be mainly due to regulations and regional characteristics in China.
On the other hand, sales of Mac/iPad and service sales continued to rise, providing positive signals.
As in past cases, the stock faltered immediately after the earnings announcement, but the stock price has rebounded steadily since then, with a positive long-term outlook.

NVIDIA (NVDA) and Insights on AI

Nvidia, which had fallen intraday, rebounded and closed at $124. Currently, it is trading at 20 times its revenue and 24 times its earnings, and although there is controversy over a "bubble" in some quarters, the growth potential is dominant considering the spread of AI and the increase in GPU demand.
The long-term demand for Nvidia is expected to increase due to the increase in demand for Big Tech and AI, and the increase in cloud infrastructure.
It is expected that the cost reduction and utilization of AI will improve, leading to steady growth potential for the semiconductor-related industry.
In particular, Nvidia plays a pivotal role in the spread of AI technology, and examples of Walmart and Meta increasing productivity and sales using AI support this.

U.S. Economic Trends

The U.S. GDP growth rate for the fourth quarter was 2.3% annualized, below the forecast (2.7%), but it still shows solid growth.
Employment is also stable, with new jobless claims decreasing by 16,000.
The robustness of the economy still provides an incentive for risky asset investments.

Virtual Asset Bitcoin (BTC)

Despite the deep-seek shock, Bitcoin maintains its upward trend and is expected to rise to $105,000.
Powell's remarks on regulation and protection, and the positive market outlook from the BlackRock CEO suggest the possibility of further increases.

Other Industries

Intel's stock price rose due to improved fourth-quarter earnings.
Global payment and airline companies such as Visa and SkyWest also rose, exceeding market expectations.
Atlashia's stock rose 16% due to strong guidance.

< Summary >

Tesla is expected to see a rise in its stock price due to the announcement of FSD and robotaxis, despite poor performance.
Apple shows growth in services and Mac/iPad, despite poor iPhone sales.
NVIDIA has long-term growth potential due to the spread of AI and increased GPU demand.
The U.S. economy maintains growth and stability in employment, making risky assets attractive.
Bitcoin continues its upward trend amid regulatory stability and positive market outlook.

[More…]

Tesla's Business Model Transformation, Robotaxi Expectations
https://nextgeninsight.net/?s=Tesla
AI Proliferation and NVIDIA's Long-Term Growth Potential
https://nextgeninsight.net/?s=Nvidia

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– 미국주식 충격 어닝에도 오르는 기현상 발생. 엄청난 대격변이 예상됩니다.