The Pomp Letter: Why Most People Are Wrong About DeepSeek AI and The Impact on Financial Markets
Tech stocks sank on Monday, following the release of the DeepSeek AI. Based out of China, the AI program claims it performs as well as ChatGPT. But, it does so at a fraction of the processing power and energy needed.
That news hit markets hard. After several years of big-tech stocks soaring, they now carry a hefty market weighting. What’s next for investors?
First, the news should be approached with some skepticism. There’s no independent verification of DeepSeek’s performance. And China has been less than honest sometimes about various developments.
Plus, claims about how little the development cost may not be accurate depending on how the AI sourced its data. Also, China is coming into its New Year. The country often likes to announce positive news going into the holiday.
In the meantime, it’s clear that there’s a global race for AI. And that AI programs will likely get faster, better, and cheaper. The big winner may not be investors in big tech companies going forward.
Rather, the winners will be consumers themselves. And as other companies are able to utilize AI programs, they can increase their productivity. That could allow other companies to flourish amid the AI boom.
Either way, it’s clear that the AI boom is just getting started. And that there will be more AI tools in the future.