Skepticism Grows Towards DeepSeek Hysteria and Its Implications for US AI

The recent excitement surrounding DeepSeek has led many to believe that it poses a serious threat to the dominance of US technology and artificial intelligence (AI). However, it is important to view this situation with a healthy dose of skepticism, as it may not be as critical as it appears from an investment standpoint.

Recently, the stock market experienced a significant decline when social media buzz about DeepSeek gained traction, particularly through influential voices like Marc Andreessen. The narrative began with claims that a hedge fund trader in China had developed an exceptionally competitive AI platform with minimal financial backing.

In contrast, major AI companies are investing vast sums into research and development, as well as into the chips needed to support their AI technologies. This is why companies like Nvidia have enjoyed strong market performances. The belief was that if DeepSeek could outperform these established giants at a lower cost, it would severely impact Nvidia's market position. Consequently, Nvidia’s value plummeted by $500 billion following this frenzy.

Understanding the Illusion of DeepSeek's Success

In the coming days and weeks, market analysts on Wall Street will be dissecting how DeepSeek purportedly managed to outpace American tech firms in the AI sector. This narrative becomes especially complicated if one considers that China’s technology landscape often leans more towards imitation of US innovations rather than original breakthroughs.

The strong parallels to past events, such as during Donald Trump's first presidential term when he initiated a trade war against China, highlight the concerns US companies have regarding intellectual property rights and the necessity to share sensitive technology with the Chinese government to enter their market.

Every company based in China is subject to oversight from the Chinese Communist Party (CCP). A notable example is ByteDance, which is under immense pressure to divest its popular app TikTok to avoid bans from US app stores, revealing the complicated relationship between technology and governance in China.

While there are many questions surrounding how DeepSeek achieved its current standing, it is reported that the company was founded by Liang Wenfeng, a hedge fund trader with impressive mathematical skills, who claims to have developed a superior AI model on a limited budget. However, the legitimacy of this claim is being heavily scrutinized.

Investigations into DeepSeek

Tech companies such as Microsoft and OpenAI are looking into whether DeepSeek relies on technology or components from established players like Nvidia, or if it has received substantial financial backing from the CCP. Noted analyst Dan Ives remains skeptical of the DeepSeek narrative, questioning how a project could achieve such success with only a mere $6 million investment.

With skepticism growing, Nvidia’s stock began to recover, along with several other tech stocks, as investors reassess the implications of the DeepSeek story. If Ives’ doubts prove correct, the narrative around DeepSeek may shift once again, allowing for a potential market rebound.

A DeepSeek representative did not respond to requests for comment regarding these developments.

DeepSeek, Tech, Skepticism