Deep Seek: A Shot Over the Bow

By John Santaferraro, CEO and Head Research Analyst

· Agentic AI,Generative AI,AI,Analytics

WOW, I take one day off and the entire world of AI changes! In fact, according the 1,333,000 articles I read on what happened while I was cooking for my friends here in Tuscany, China is now ahead, the US is now behind, and the rest of the world is in trouble. Tech stocks crashed, trillions were lost in value, billions were lost in the sell off, and China now has an economic advantage with cost at about 4% of what their AI competitors are charging.

I say, TIME OUT. Let the dust settle. There is more here than what meets the eye. This is China. The same country trying to undermine retail in the US with entire companies based on loss leaders. The same country that told us that COVID didn't come from the Wuhan Lab. A country that by nature of their ideology, will do whatever it takes to beat the US and the world. China's strategic initiatives to disrupt the US is indisputable and openly documented by China itself. So, time out.

Just because DeepSeek says they spent $6M on training their models, doesn't mean that is true. Something is not right. Just because they published a paper "documenting" how they trained their models for $6M, doesn't mean that is true. The whole launch, campaign, and fear-mongering that goes with it is designed to upset the market, and to spread fear and doubt about other AI products.

Now is not a time to panic. Now is a good time to dig deeper into DeepSeek to see what is true and what is a lie. There is certainly some of both. On the positive side, this is a good wake up call for AI vendors, researchers, and buyers. Now is the time to ask more questions: How can we do AI in a less expensive way? How can we do AI without consuming as much power? What does this shift toward OpenSource mean for us? How do we continue to excel in our AI research? How can we work together?

It seems like this is a good time for the US to double down on its AI investment, but to do it in a way that makes the most of our investments. Right now, the market has thrown trillions of dollars at AI, but unfortunately, we will see the shakeout in the next few years. In some ways, the drop in the inflated market is a good correction, maybe it will lessen the impact of the day when the AI bubble bursts. It is time to determine where the investment can best be made and to focus, accelerate, and continue to lead the market. The free market will always be the best way to move forward with innovation, and a government controlled market will never catch up unless we decide to continue to give them everything they need to continue to expand their government control.

DeepSeek is nothing more than a shot over the bow.

So, thank you, China. Thank you, DeepSeek. Perhaps you have awakened a sleeping giant and filled him with a terrible resolve.

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