I don't know if you've heard by now, but today's dip is mainly because DeepSeek, a Chinese artificial intelligence company has developed an open-source artificial intelligence model that some say works better than ChatGPT and other US AIs, and more importantly, does it for a fraction of the cost. This comes shortly
after the US announced a $500B investment in AI.The tech bubble has been behind the success of Nvidia, the world's most profitable company until MicroStrategy came into play. These companies, many of which have AI projects, have caused a huge demand for hardware that with the success of DeepSeek is now in doubt as to whether it will continue to be needed.
As a result, Nvidia is currently down 17% in today's session, and the Nasdaq is down 3.32%. As you may have noticed it has affected the markets in general and also bitcoin and cryptocurrencies which are also trading down today.
Here is an article on the subject:
Why Is DeepSeek Sinking Nvidia Stock?What do you think about it?
I think that interested financial institutions and individuals will look for any reason to inflate the bubble further. Indeed, the following events have occurred in recent days: OpenAI has accused DeepSeek of training its model using ChatGPT;
An investigation has begun into a possible violation of sanctions when selling powerful chips (probably H100) to China through Singapore;
Yesterday, OpenAI released its new o3-mini model, and most importantly, which can be used for free.
It looks like a commotion.
It is possible that DeepSeek actually trained its model on the H800 (not under sanctions), as evidenced by the current trend of decreasing model sizes (and resource requirements) with a strong improvement in the quality of synthetic datasets. Small models are distilled from large ones. That is, it is happening exactly as Andrej Karpathy predicted not so long ago. If so, the consequences for financial markets will be catastrophic. There's even a meme about the fact that the economy is based on two pillars: NVIDIA and Taylor Swift.