The collapse of chipmaker Nvidia’s stock triggered a general run on tech stocks, but the underlying reason was superficially odd: the low development and operating costs of the new array of DeepSeek models. Nvidia. DeepSeek is the new rage in Artificial Intelligence, drawing comparison with ChatGPT, and its recent launch was the signal for a collapse of Nvidia shares. Nvidia is not just a leading chipmaker, but a specialist in making chips for AI applications. That DeepSeek was developed with fewer and less advanced chips, and that its operation also needed fewer chips meant that Nvidia’s chips were not needed so much, and their stock price went down. Not just that, but the huge investments being made by such companies as Google and Meta in AI, primarily in the shape of setting up data centres, were now viewed negatively by the stock market.
One of the more interesting aspects of the affair has been the use of Cold War language by a xenophobic USA, with one US reaction being that it was a ‘Sputnik moment’. The USA was shocked by the USSR’s launch of a satellite. Sputnik, before it did, in 1957. This was celebrated by the USSR as a victory in the Cold War, and is accounted as the launch of the ‘Space Race’ which culminated in 1069 with the 1969 moon landing. It was some of the hangover of that, that the USA has insisted that it was the world’s premier power in all scientific and technological fields, AI included. DeepSeek was considered a Chinese achievement rather than merely a technological one, and fitted itself into the prevalent conflict paradigm.
It might seem paradoxical that Deepseek has to compete with another Chinese AI model, Alibaba’s Qwen 2.5, but it makes sense, once one realizes that the competition is not national, but commercial. The turmoil in tech stocks should make it clear that the future of technological applications, and not just AI, will be in turmoil as Mankind adapts. AI is in its early stages, which means that developing countries like China (and Pakistan) have a chance they do not have of competing with countries with long histories of excellence in such fields as heavy industry.
