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Roula Khalaf, editor of FT, chooses her favorite story in this weekly newsletter.
It is difficult to talk about the economic history of the 21st century without discussing the “Chinese shock”. It is a term often used to describe the Chinese entrance to the global market, a change that has brought to rich countries with an abundance of cheap goods, but has left the entire industry and labor.
Deepseek can provide a continuation. The little known Chinese Hedge Fund threw a grenade into the world of artificial intelligence with a large linguistic model, which, in fact, coincides with the market leader, Sam Altman Openi, with a work-act. And while Openi treats the work of its models as the ownership, Deepseek’s R1 carries its technical interior from the outside, which makes developers attractive to use and material.
Things move faster at AI AGE; Scary so. Five largest technological stocks aimed at Ai-Chip Maker Nvidia and so-called hyperscalere alphabets, Amazon, Microsoft and Meta platforms-in a course shed almost $ 750 billion market values before US markets opened on Monday. For Nvidia, it could be particularly gloomy if it shows that Deepseek won without the use of his brightest chips.
Investors in technological companies – including Europeans like the ASML chips of energy companies, which investors hoped to encourage the incentive of fuel data centers – they wonder if their investments will increase in smoke. Hyperscalers were supposed to push nearly $ 300 billion in capital expenditures this year, according to visible alpha estimates. Analysts expect that on Wednesday, when they apply for earnings, Meta and Microsoft will report an investment for 2024 in the amount of $ 94 billion.
True, the game is not over. The actual potential of Deepseek is still unclear, and one has yet to achieve an “artificial general intelligence”, a human state that the target and opening follow. But the rules may have changed. At the very least, Deepseek can take some of the customers of American giants. In the worst case, it caused a fundamental belief that more hardware was the key to a better AI. This principle supported the market value of the Silicon Valley companies as they invest their hand over their fists.
What is bad for hyperscalers could still be a decline for everyone else. For most business users, having absolutely the best model is less important than having one that is reliable and good enough. Not every driver needs Ferrari. Progress in explanation such as R1 could be a big step for “agents” dealing with customers and doing tasks in the workplace. If they are available cheaper, corporate profitability should grow.
In this sense, this second Chinese shock could resemble the first. This could bring not only destruction, but also re -examined – although painful to many. Researchers estimated that for each job it was lost to Chinese shock, The purchase of US households has increased by more than $ 400,000. The superiority race Ai is in a break; A great gift began.
