What a difference a trading day makes.
On Friday, Wall Street went to bed confident that the United States had a commanding lead in artificial intelligence. After all, Nvidia makes the world-leading chips on which to create cutting-edge AI, while the U.S. government has forbidden the export of such chips to America’s near-peer competitor, China.
On Monday, U.S. equity markets plunged $1 trillion in valuation after it became widely known that DeepSeek, a small Chinese startup, ran rings around the AI invented by blue-chip American tech companies and their $1 trillion investment in this technology. This bolt from the blue was not an extinction-level asteroid, but for Nvidia, Google, Microsoft, and other U.S. giants it did cast shadows that looked suspiciously large, fat, and a bit saurian.
Later in the day, markets calmed a bit with the assurance that China will soon run out of Nvidia chips and that the purported $6 million investment by DeepSeek in its technology could mask deeper investments by Beijing. (Perhaps the phrase “Chinese accounting” deserves to become the next infamous euphemism.) But the magnitude of this event should not be denied. A country capable of producing DeepSeek is probably capable of mounting a challenge to overcome other obstacles in front of it, perhaps matching the best chips Americans can make, or more likely securing reliable backdoor access to them in global markets. This is especially true given the likelihood that China’s leader Xi Jinping is driving this project as part of his campaign to best the United States.
This competitive threat from China is not likely to be underestimated in Palo Alto and Seattle. But a hubristic threat remains in Capitol Hill and the Federal Trade Commission in Washington, D.C., as well as among regulators in Brussels and London. While American companies adjust to an unexpected competitive threat from a hostile nation, many continue to treat American Big Tech as an indestructible feature of the global market. […]
— Read More: amgreatness.com
