The American stock markets shivered on Monday, caused by the announcement of China that he created an artificial intelligence machine capable, cheap. It is the biggest cloud to darken the enthusiasm of the Blue sky of the West on AI, questioning the effectiveness of the controls of American exports and billions of dollars that the United States flock to the dear to technology.
The Chinese startup Deepseek says that its assistant AI uses less advanced fleas than the models of its rivals, and it costs less to train. Unlike the billions of the West, the Chinese model was developed for only $ 5.6 million, by an estimate.
“Are we going to spend $ 500 billion to go to the border so that China can find a way to copy our homework for money on the dollar?” Asked Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies, on a podcast on Friday.
Why we wrote this
China’s latest technological company calls into question investment strategies and concepts about the quantity of expertise necessary to succeed in artificial intelligence. If history is used, the market could soon see a spectacular victory of players in AI.
On Monday in Wall Street, the actions of the company of IA fell hard. The NVIDIA Prize, the IA flea leader, plunged around 17%, when investors have assessed the prospect that Chinese players could threaten American technological profits. The S&P 500 fell by almost 1.5% and the Nasdaq, heavy in technology, dropped by 3%.
But the experts warned against panic. It is important not to overestimate the Chinese threat, according to analysts. Deepseek’s new AI model is both a real success and media beaten from Beijing. It shows China’s ability to simplify American models, creating a means for less and less powerful computer flea to provide answers that compete with the most expensive models in America. Deepseek said last week that his latest model can compete with an Openai Chatppt version published four months ago.
In many ways, the Deepseek model is parallel to the manufacturing prowess of China. And in this case, Deepseek has put its product on the public domain, which means that anyone can use it for free. On Monday, it became the best rated free application on the Apple App Store.
Test export controls, propaganda tools
Deepseek positions China as a rapid follower of American technology. But it is far from challenging the American position at the forefront, according to analysts.
The “concern is overestimated because, on the basis of the available data, we believe that the Deepseek model … is based on more important foundation models to develop first”, according to a research note Bank of America / Merrill Lynch on Monday. Followers, in other words, cannot be leaders.
Technology also serves as a propaganda tool for Beijing. By showing China’s ability, the regime hopes to prove that American export controls do not work. But analysts suggest that they simply show the failure of the 2022 export controls under President Joe Biden. These orders have since been tightened.
It may not be a coincidence that Deepseek announced that he had put his AI software in the public field last week after Mr. Biden published three new laps of export restrictions aimed at further reducing China’s ability to access the most advanced fleas.
“As Land of Liberty, America – not China – must lead the world in the development of AI,” said the president of the time, Biden in his farewell speech on January 15.
Analysts say that export controls cannot stop the flow of technology. But they can make more difficult and more expensive for China to compete and follow technology, in particular with the new public-private joint venture of President Donald Trump who could invest up to $ 500 billion in AI infrastructure.
Public domain and money liners for American companies
And while putting the Deepseek model in the public domain was a short -term propaganda victory, he can turn against him. American companies now have the Chinese code to simplify their own search engines. And with better access to powerful fleas, Americans can create their own models of almost cost on-board AI at a lower cost and maybe offer them for free.
What model will the global market adopt? A technology that could give the Chinese government access to its data? Or the Western products in the private sector where, probably, the geopolitical risks are lower?
The biggest question of Deepseek poses is for investors. If many companies can work with a fairly cheaper and good AI, what amount of investment should go at the cutting edge of technology?
These investments are currently losing money. If history is a guide, it will take several years to make a profit in an intense race that could win leaders at one or two. Think of Microsoft’s Windows in personal computers. Or google in web search.
One thing is certain. The cloud of doubt Deepseek on the horizon of investors could grow if investors were starting to weigh the promise of AI against costs to create it more carefully.
