A new Chinese AI model, created by the Hangzhou-based startup DeepSeek, has stunned the American AI industry by outperforming some of OpenAI’s leading models, displacing ChatGPT at the top of the iOS app store, and usurping Meta as the leading purveyor of so-called open source AI tools.
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00:00AI is becoming cheaper, it is becoming better, and the progress is continuing to increase.
00:07Models are continuing to get better, even though a while ago people thought that it
00:12might stop in 2024, but it has accelerated.
00:16And so I think we're in a place where there's a larger and larger range of tools for people
00:22to choose from, but DeepSeek seemingly definitely is now in the game and people will use it,
00:29but not for everything.
00:30It was clear that they were one of the leading shops in China, but it's a very small outfit
00:37that basically achieved some remarkable AI capabilities.
00:42And that's also another thing that's remarkable about it is that they did so with very much
00:48less resources than some of the big tech firms.
00:51And so that's why it's caused a bit of an upset, because people thought that it wouldn't
00:56really be possible to build such a good AI unless you're big tech.
01:01And so it has changed people's perception on the industry a little bit.
01:06The fact that the market hasn't really been prepared for this news or these latest developments,
01:12I think is reflected by this big sell-off in the NASDAQ, the U.S. tech-focused index.
01:19We've seen the volatility gauge on Wall Street, the fear index is also known to reach its
01:26highest level since mid-December.
01:28So, you know, we're seeing these big reactions, but I think this is a knee-jerk reaction.
01:33It's just a reflection of the surprise that we're seeing in the market as investors struggle
01:40to or rush, should I say, to price in this latest development.
01:45It's just really sort of almost pulled the carpet out, if you like, under this AI trade,
01:51which has been rallying across 2024 and really has had quite an easy ride so far.
01:57This is the first time that it feels that there has really been sort of a disruption
02:02to the potential outlook for AI, or particularly those firms such as Nvidia, who's really benefited
02:09from the run-up so far.