I actually knew that DeepSeek existed a week ago. Thanks to Tiktok. But I didn't suspect that it would have an impact on the markets today, otherwise I would probably have sold everything to get in at a lower price today. *wink*
Basically, however, there was no reason to make this assumption, as it is actually only bad news for one company: OpenAI. They were previously regarded as an absolute pioneer and trailblazer in the AI business, but are now coming under a lot of pressure from the low-cost competition from China. The most likely to suffer here is anchor shareholder $MSFT (+0,01%) and of course Alphabet's competitors $GOOGL (-0,88%) who, despite their expertise, have only managed to embarrass themselves with their language model in a relatively high-profile manner.
But why on earth are the manufacturers of AI infrastructure being punished? Starting with $NVDA (-0,29%) but also all the way to $SNPS (+1,86%) or $ASML (+0,1%) it doesn't really make much sense. Here's what happened: A guy used a shovel to dig away a lot of soil, which impressed us for two years. Now a Chinese guy comes around the corner with a shovel and digs away just as much. Are spoons more efficient than shovels? Somehow not.
What China is NOT showing here is that they have managed to develop chips that shave off everything on the market without a technological advantage. They have only managed to prove that OpenAI needs a lot of computing power to do relatively "little" with it. In my view, this doesn't affect the infrastructure providers and certainly not the companies that can meaningfully integrate AI into their software.
If, for example, a Salesforce $CRM (-0,15%) can expand its margins by using the Agentforce platform, this is absolutely unique and cannot simply be copied. Just because some Chinese company has some Chinese program, I am still a Salesforce customer with my company and only benefit from the features that my provider has. There have certainly been cool features on VK networks for 20 years, but here in Germany we are all on Instagram and co. and not on the other - perhaps better - social media from Asia.
As I said, it's a hard blow for OpenAI that their success has been copied. It is also bitter that the others offer this at a much lower price and with fewer performance requirements. Although cheaper is actually a non-issue. They will probably have to cross-finance this somehow and OpenAI didn't charge the prices because they had to, but simply because they could. Ultimately, it's normal in any market that prices eventually become relative and you can't keep charging moon prices for simple services (or Dubai chocolate) forever.
Of course, there will now be a bit of pressure on companies and they will put more pressure on their IT departments to do something with the resources they already have. But that's not a bad thing per se. I think it's a completely messed up idea to think that all companies should be inefficient because they will then spend more money and increase GDP. After all, we're talking about companies here, not the federal government. In the long run, the DeepSeek shock will tend to channel resources in the right direction and that is exactly what the market is supposed to do.
Last year, there were fears that AI could not make any money at all, which have since been refuted. That would have been a much worse scenario than only making money if you manage to reduce cost pressure and increase productivity.
