With the stock market dominated by US tech companies focused on AI, is DeepSeek's competitor to OpenAI about to brings things crashing down? The post Is DeepSeek about to cause a stock market crash? appeared first on The Motley Fool UK.

I think we’re about to get a crash in 5 hours folks

The companies known as the Magnificent Seven make up over 20% of the global stock market. And a lot of this is based on their perceived advantage when it comes to artificial intelligence (AI).

The big US tech firms hold all the aces when it comes to cash and computing power. But DeepSeek – a Chinese AI lab – seems to be showing this isn’t the advantage investors once thought it was.

DeepSeek doesn’t have access to the most advanced chips from Nvidia (NASDAQ:NVDA). Despite this, it has built a reasoning model that is outperforming its US counterparts – at a fraction of the cost.

Investors might be wondering about how seriously to take this. But Microsoft (NASDAQ:MSFT) CEO Satya Nadella is treating DeepSeek as the real deal at the World Economic Forum in Davos:

“It’s super impressive how effectively they’ve built a compute-efficient, open-source model. Developments like DeepSeek’s should be taken very seriously.”

Whatever happens with share prices, I think investors should take one thing away from the emergence of DeepSeek. When it comes to AI, competitive advantages just aren’t as robust as they might initially look.

  • xiaohongshu [none/use name]@hexbear.netEnglish
    65·
    3 days ago

    The entire AI sector has been exposed for the naked emperor it is and the fall of this massively bloated and oversized investment may lead us into yet another AI winter.

    Having said that, I remember relishing at the last Bitcoin crash, thinking that this completely useless token can only go into the negatives (when you adjust for the massive energy cost it takes to mine crypto, their value is less than worthless).

    Guess what, bitcoin has only gone up since and it is now being backed by the US federal government. Imagine that. All the crypto idiots somehow got it right for the wrong reasons.

    The market is not rational. At this point playing the market is as good as gambling unless your net worth is over a billion (Michael Hudson said this) and have access to insider information.