Big Tech’s vision of AI shaken by a Chinese startup

CGTN Europe

Chinese startup DeepSeek has shaken Wall Street by casting doubt on the power of the U.S. companies who were thought to dominate the Artificial Intelligence market. CGTN Europe’s John Terrett gives the perspective from New York.  #DeepSeek #AI

Transcript

00:00I think the first thing to say about this, you know, is that this is a real victory for China.

00:04Well done them, because they, if this is true, if this all pans out for deep-sea,

00:09then they've gone and created this chat GPT equivalent and these cheaper chips in the face of very, very

00:15severe restrictions from the Biden administration over the last four years. And being frank about it,

00:20it's a difficulty of getting hold of some of the commodities that you need to make these microchips. Water, for example, is scarce in parts

00:27of China, and you need water to make these microchips. But I will tell you from Wall Street's perspective,

00:31it brings into very, very sharp relief the

00:35sort of concern that Wall Street has about investing in these Chinese ADRs that trade here.

00:40These are Chinese companies that trade in America under the tag ADR, American Depository Receipt.

00:45So Wall Street is nervous about investing in them, and just this kind of thing is why.

00:50Because on Friday, nobody here had ever heard of deep-sea, okay?

00:54Now, I want to be absolutely clear with you. That is partially true, all right?

00:58I hadn't heard of them. Most of the people on the floor hadn't heard of the company.

01:02There are specialist journalists who do nothing but this kind of stuff all the time who do know about them.

01:06And of course, I think Meta Platforms has had some sort of relationship.

01:10But basically, they've gone in the space of two days from being a company

01:14no one in the West had ever heard of, to dominating the international headlines and bringing down the global markets.

01:20Now, deep-sea is a startup.

01:22It's based in Shenzhen, in Hangzhou, and the buzz began over the weekend.

01:26And the buzz is that if they have really done this, really produced this equivalent to Chad GPT

01:32using much, much, much cheaper AI chips,

01:36then we have to re-evaluate the high value of all the companies here like NVIDIA and Broadcom,

01:43which have been going up in value in the last couple of years based on their AI development.

01:47And NVIDIA, you must remember, their chips cost somewhere between $10,000 and $40,000 per chip.

01:53And you're going to need thousands of these things if you're going to have a data center.

01:56Well, apparently, deep-sea can do it much, much cheaper.

01:59So we will see. But that's forced this huge big tech sell-off over here.

02:03It calls into question the value of the Magnificent 7, of course.

02:07And all of this, just as the Magnificent 7 have begun announcing massive what we call CAPEX spending into AI projects.

02:16Now, they did a lot in 2024. They're promising to do even more, or they were in 2025.

02:22So it's a challenge to Microsoft and Meta and all of that.

02:25However, however, as always, there's a caveat and questions to be raised.

02:30Number one question is this is the only data point we've got.

02:34All we have is deep-seas word and we can't look into their books.

02:38We can't see behind the deep-sea curtains.

02:41So that's a problem.

02:43Also, the question is, will anyone actually buy the deep-sea product?

02:48Will they go for it? They may not.

02:49Also, how is it actually going to be used and how accurate is it?

02:54My understanding is it's very, very similar to chat GPT.

02:58And you can switch between the two if you want to very, very super easily.

03:01But how accurate is it?

03:02That's going to be the thing that people will be most interested in.

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