January 27, 2025 • 8 mins
In this bonus episode from Bloomberg Daybreak, hosts Nathan Hager and Karen Moskow examine the emergence of DeepSeek. The Chinese artificial intelligence startup is rocking global technology stocks, raising questions over America’s technological dominance.
Buzz grew over the weekend about DeepSeek’s latest AI model being cost-effective while running on less-advanced chips, casting doubt on the validity of the rich valuations for companies like Nvidia.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:09):
Good morning, I'm Nathan Hager and I'm Karen Moscow. Here
are the stories we're following today.
Speaker 3 (00:15):
Thank Karen.
Speaker 4 (00:15):
We begin with concerns over the impact that a Chinese
artificial intelligence startup could have on big US tech stocks.
It is called deep Seek. Buzz grew over the weekend
about deep Seek's latest AI model being cost effective while
running on less advanced chips. That's casting doubt on the
validity of the sky high valuations for companies like Nvidia.
(00:37):
We get more from Bloomberg Markets reporter Mark Cudmore.
Speaker 5 (00:40):
I think this is probably a game changing moment because
I think suddenly the whole US stocks exceptionalism of the
last fourteen to fifteen years is probably undermined by this
because it's simultaneously is good for productivity and growth from
the rest of the world, good for companies all over
the rest of the world, and undermines the whole US
tech phenomenon. So I think it hits from both sides.
So I think actually last Thursday probably said that the
long term peak in US share of global market cap.
Speaker 4 (01:03):
Bloomberg's Mark Cudmore says the AI model from Deepseek is
widely seen as competitive with open Ai and Meta's latest offerings.
Speaker 2 (01:10):
Nathan Chinese, a startup, Deep Seek, is now top of
the iPhone download charts. De Aboue being hobbled by sanctions.
Capital dot Com senior market analyst Kyle Rada says it
raises questions about the market narrative around US tech dominance.
Speaker 6 (01:24):
Anyone's on a sort of group chat with equity investors
or any kind of equity strategist phones are running hot,
effectively talking about well, what is this product, how they
achieved these outcomes, and what does this mean for the
AI investment boom in the United States. It raises concerns
about overinvestment in artificial intelligence. It raises concerns that perhaps
the United States might have the competitive advantage that it
(01:44):
has over the rest of the world. It raises concerns
that chip demand won't be as great going forward, either
in companies like in Video or overvalued.
Speaker 2 (01:50):
Capital dot Com senior market analyst Kyle Rada several of
the big tech stocks falling on the news and Video
shares down ten percent. SML is off by about eleven percent.
Meta and Microsoft are lower by well more than four percent.
Pall and teer down six percent, super Micro and soundhounder
off by at least nine percent.
Speaker 4 (02:08):
And Karen This deepseek news comes just as investors brace
for a slew of earnings from the Magnificent seven Bloombergs.
John Tucker's following this end of the story in John
and feels like the news couldn't get any more dicey.
Speaker 3 (02:19):
Well, it could. The company sharers have been near record highs,
their valuations are stretched, Nathan and add to this the
fact that the group's profit growth It's projected to come
in at the slowest pace in almost two years of
Profits for the seven Giants are projected to increase by
twenty two percent in the fourth quarter from a year earlier.
That actually would be the smallest jump since the first
(02:40):
quarter of twenty twenty three. The seven companies announcements they
start Wednesday. That's when Microsoft, Meta and Tesla our scheduled report.
Apple follows Thursday, while we get Alphabet and Amazon next week,
and then chip maker Nvidia that comes late February. Capex
also going to be a big theme. Microsoft, Alphabet, Amazon, Meta.
They're all projected to have spent more than two hundred
(03:02):
billion dollars combined on capital expenditures in their last fiscal year,
and they've all pledged to spend more in the current year.
In New York, I'm John Tucker, Bloomberg Radio.
Speaker 1 (03:14):
Coast to coast on Bloomberg Radio, nationwide on Sirius XM,
and around the world on Bloomberg dot Com and the
Bloomberg Business app. This is Bloomberg Daybreak.
Speaker 3 (03:24):
Good morning.
Speaker 4 (03:25):
I'm Nathan Hager. We are seeing a route in tech
stocks this morning. Chinese startup deep Seek is driving a
lot of buzz around the idea of a low cost
artificial intelligence model running on less advanced chips. Capital dot
Com senior market analyst Kyle Rada says it could mark
a narrative shift for the US led AI boom.
Speaker 6 (03:44):
That kind of proverbial arms right in technology investment in
an AOLI investment has taken a very very interesting turn
when now China looks like a very viable competitor and
a competitor that you know, perhaps might catch the ire
of the Trump administration.
Speaker 4 (03:56):
It's Kyle Rada of Capital dot Com and for more.
We're joined by Bloomberg Radio and television news anchor Critty Gooped. Critty,
Good morning, what is it about Deepseek's model that we're
hearing about right now that Scott tech investors clearly so
spooked this morning.
Speaker 7 (04:09):
Well, good morning, Nathan. This is kind of the worst
nightmare for a tech bull in that we know so
much money has been pumped, specifically from the hyperscalers like Amazon, Microsoft, Apple,
et cetera, who are sitting on trillions of dollars of
cash just getting pumped into the future of artificial intelligence,
and this, of course what's created this massive stock market rally.
(04:31):
The concern here now is that maybe all of that
money didn't necessarily need to be put into the extent
that it has in the stock market. Let me walk
you through some of my math here, and Nathan. For example,
one Nvidia Blackwell chip is expected to go on the
market for somewhere like thirty to forty thousand dollars per unit.
I remember we're talking about a chip alone, and of course
(04:51):
a ton basically of units hues for one individual AI
data centers as so many of these companies are trying
to build out of course hundreds of data centers around
the world. So you can see very quickly how the
argument of just how much one chip is valued can
kind of skyrocket into almost an unknown positive figure. And
that's the sentimental least that's been fueling the stock market rally.
(05:14):
But the low and behold deep Seek this Chinese startup
around AI that's using technology very similar to that of
open ai, which is already kind of on the front
of the latest inn AI. They are now saying that
they can do it on a much cheaper cost. So
if you're talking about the things you need to get
to artificial intelligent intelligence, think of it as a recipe.
(05:37):
You need chips, you need engineers, you need software kind
of talent who are thinking about this. You need a
data center, you need an electricity grid, you need things
like natural gas or oil to power that data center,
even solar for example. For the folks that are looking
into that, imagine if that one element of that recipe
is now able to be significantly cheaper. That's what deep
(05:59):
set has basically shown over the weekend and in going
into last week as well, that they can do that.
They can provide the same sort of technology for a
much cheaper price. So the reason you're seeing the market
reflected is saying, well, hold on a second, if you
can do this for not as expensive of the price
as previously thought, Then why have these stocks been rallying
to such an extent? And that's kind of the sentiment
(06:21):
that's driving this global tech route today.
Speaker 4 (06:23):
And it's a sentiment that had driven you know, so
much of the rally as you mentioned up to now
that puts a focus of pretty bright spotlight. Now doesn't
it on the tech earnings that are coming up as
soon as Wednesday for a lot of these big hyperscalers.
Speaker 7 (06:37):
It absolutely does? And I think context is everything here, Nathan,
because remember these hyperscalers. I mean, we talk about just
a handful of companies that are powering and video. I
remember and Video over about fifty percent of their kind
of gains and their customer base is really just from
a handful of the mag seven names, your Amazon's, your Microsoft's,
et cetera. And they're able to invest that much because
they are still sitting on trillions of dollars of cash
(07:00):
post pandemic and things that haven't really been able to
be deployed in acquisitions. And this is something that the
tech playbook is known very well for that you know,
you kind of bolt on some of these deals you
buy new technology, think of a Facebook, for example, buying
Instagram back in the day. It's a similar playbook. They
haven't really been able to do that and use that cash. Instead,
(07:20):
they're spending a lot of that cash and investment in
research and of course in AI.
Speaker 3 (07:25):
Now.
Speaker 7 (07:25):
Basically the element here is that maybe you don't need
to do that. But I'm going to caveat all of this,
Nathan by simply saying, this is still experimental technology. This
is still just one example, and we also don't have
the full figures on what kind of chips they use,
just how much it's costing, and whether or not there
are others like it, or if this is just kind
of a one hit wonder. Those are still the questions
that remain in this market.
Speaker 2 (07:47):
This is Bloombery Daybreak, your morning podcast on the stories
making news from Wall Street to Washington and beyond.
Speaker 4 (07:54):
Look for us on your podcast feed by six am
Eastern each morning, on Apple, Spotify, or manywhere else listen.
Speaker 2 (08:00):
You can also listen live each morning starting at five
am Wall Street time on Bloomberg eleven three to zero
in New York, Bloomberg in ninety nine to one in Washington,
Bloomberg ninety two nine in Boston, and nationwide on serious
XM Channel one twenty one.
Speaker 4 (08:15):
Plus listen coast to coast on the Bloomberg Business app
now with Applecarplay and Android auto interfaces.
Speaker 2 (08:21):
And don't forget to subscribe to Bloomberg News Now. It's
the latest news whenever you want it in five minutes
or less. Search Bloomberg News Now on your favorite podcast
platform to stay informed all day long. I'm Karen Moscow.
Speaker 4 (08:34):
And I'm Nathan Hager. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:09):
Good morning, I'm Nathan Hager and I'm Karen Moscow. Here
are the stories we're following today.
Speaker 3 (00:15):
Thank Karen.
Speaker 4 (00:15):
We begin with concerns over the impact that a Chinese
artificial intelligence startup could have on big US tech stocks.
It is called deep Seek. Buzz grew over the weekend
about deep Seek's latest AI model being cost effective while
running on less advanced chips. That's casting doubt on the
validity of the sky high valuations for companies like Nvidia.
(00:37):
We get more from Bloomberg Markets reporter Mark Cudmore.
Speaker 5 (00:40):
I think this is probably a game changing moment because
I think suddenly the whole US stocks exceptionalism of the
last fourteen to fifteen years is probably undermined by this
because it's simultaneously is good for productivity and growth from
the rest of the world, good for companies all over
the rest of the world, and undermines the whole US
tech phenomenon. So I think it hits from both sides.
So I think actually last Thursday probably said that the
long term peak in US share of global market cap.
Speaker 4 (01:03):
Bloomberg's Mark Cudmore says the AI model from Deepseek is
widely seen as competitive with open Ai and Meta's latest offerings.
Speaker 2 (01:10):
Nathan Chinese, a startup, Deep Seek, is now top of
the iPhone download charts. De Aboue being hobbled by sanctions.
Capital dot Com senior market analyst Kyle Rada says it
raises questions about the market narrative around US tech dominance.
Speaker 6 (01:24):
Anyone's on a sort of group chat with equity investors
or any kind of equity strategist phones are running hot,
effectively talking about well, what is this product, how they
achieved these outcomes, and what does this mean for the
AI investment boom in the United States. It raises concerns
about overinvestment in artificial intelligence. It raises concerns that perhaps
the United States might have the competitive advantage that it
(01:44):
has over the rest of the world. It raises concerns
that chip demand won't be as great going forward, either
in companies like in Video or overvalued.
Speaker 2 (01:50):
Capital dot Com senior market analyst Kyle Rada several of
the big tech stocks falling on the news and Video
shares down ten percent. SML is off by about eleven percent.
Meta and Microsoft are lower by well more than four percent.
Pall and teer down six percent, super Micro and soundhounder
off by at least nine percent.
Speaker 4 (02:08):
And Karen This deepseek news comes just as investors brace
for a slew of earnings from the Magnificent seven Bloombergs.
John Tucker's following this end of the story in John
and feels like the news couldn't get any more dicey.
Speaker 3 (02:19):
Well, it could. The company sharers have been near record highs,
their valuations are stretched, Nathan and add to this the
fact that the group's profit growth It's projected to come
in at the slowest pace in almost two years of
Profits for the seven Giants are projected to increase by
twenty two percent in the fourth quarter from a year earlier.
That actually would be the smallest jump since the first
(02:40):
quarter of twenty twenty three. The seven companies announcements they
start Wednesday. That's when Microsoft, Meta and Tesla our scheduled report.
Apple follows Thursday, while we get Alphabet and Amazon next week,
and then chip maker Nvidia that comes late February. Capex
also going to be a big theme. Microsoft, Alphabet, Amazon, Meta.
They're all projected to have spent more than two hundred
(03:02):
billion dollars combined on capital expenditures in their last fiscal year,
and they've all pledged to spend more in the current year.
In New York, I'm John Tucker, Bloomberg Radio.
Speaker 1 (03:14):
Coast to coast on Bloomberg Radio, nationwide on Sirius XM,
and around the world on Bloomberg dot Com and the
Bloomberg Business app. This is Bloomberg Daybreak.
Speaker 3 (03:24):
Good morning.
Speaker 4 (03:25):
I'm Nathan Hager. We are seeing a route in tech
stocks this morning. Chinese startup deep Seek is driving a
lot of buzz around the idea of a low cost
artificial intelligence model running on less advanced chips. Capital dot
Com senior market analyst Kyle Rada says it could mark
a narrative shift for the US led AI boom.
Speaker 6 (03:44):
That kind of proverbial arms right in technology investment in
an AOLI investment has taken a very very interesting turn
when now China looks like a very viable competitor and
a competitor that you know, perhaps might catch the ire
of the Trump administration.
Speaker 4 (03:56):
It's Kyle Rada of Capital dot Com and for more.
We're joined by Bloomberg Radio and television news anchor Critty Gooped. Critty,
Good morning, what is it about Deepseek's model that we're
hearing about right now that Scott tech investors clearly so
spooked this morning.
Speaker 7 (04:09):
Well, good morning, Nathan. This is kind of the worst
nightmare for a tech bull in that we know so
much money has been pumped, specifically from the hyperscalers like Amazon, Microsoft, Apple,
et cetera, who are sitting on trillions of dollars of
cash just getting pumped into the future of artificial intelligence,
and this, of course what's created this massive stock market rally.
(04:31):
The concern here now is that maybe all of that
money didn't necessarily need to be put into the extent
that it has in the stock market. Let me walk
you through some of my math here, and Nathan. For example,
one Nvidia Blackwell chip is expected to go on the
market for somewhere like thirty to forty thousand dollars per unit.
I remember we're talking about a chip alone, and of course
(04:51):
a ton basically of units hues for one individual AI
data centers as so many of these companies are trying
to build out of course hundreds of data centers around
the world. So you can see very quickly how the
argument of just how much one chip is valued can
kind of skyrocket into almost an unknown positive figure. And
that's the sentimental least that's been fueling the stock market rally.
(05:14):
But the low and behold deep Seek this Chinese startup
around AI that's using technology very similar to that of
open ai, which is already kind of on the front
of the latest inn AI. They are now saying that
they can do it on a much cheaper cost. So
if you're talking about the things you need to get
to artificial intelligent intelligence, think of it as a recipe.
(05:37):
You need chips, you need engineers, you need software kind
of talent who are thinking about this. You need a
data center, you need an electricity grid, you need things
like natural gas or oil to power that data center,
even solar for example. For the folks that are looking
into that, imagine if that one element of that recipe
is now able to be significantly cheaper. That's what deep
(05:59):
set has basically shown over the weekend and in going
into last week as well, that they can do that.
They can provide the same sort of technology for a
much cheaper price. So the reason you're seeing the market
reflected is saying, well, hold on a second, if you
can do this for not as expensive of the price
as previously thought, Then why have these stocks been rallying
to such an extent? And that's kind of the sentiment
(06:21):
that's driving this global tech route today.
Speaker 4 (06:23):
And it's a sentiment that had driven you know, so
much of the rally as you mentioned up to now
that puts a focus of pretty bright spotlight. Now doesn't
it on the tech earnings that are coming up as
soon as Wednesday for a lot of these big hyperscalers.
Speaker 7 (06:37):
It absolutely does? And I think context is everything here, Nathan,
because remember these hyperscalers. I mean, we talk about just
a handful of companies that are powering and video. I
remember and Video over about fifty percent of their kind
of gains and their customer base is really just from
a handful of the mag seven names, your Amazon's, your Microsoft's,
et cetera. And they're able to invest that much because
they are still sitting on trillions of dollars of cash
(07:00):
post pandemic and things that haven't really been able to
be deployed in acquisitions. And this is something that the
tech playbook is known very well for that you know,
you kind of bolt on some of these deals you
buy new technology, think of a Facebook, for example, buying
Instagram back in the day. It's a similar playbook. They
haven't really been able to do that and use that cash. Instead,
(07:20):
they're spending a lot of that cash and investment in
research and of course in AI.
Speaker 3 (07:25):
Now.
Speaker 7 (07:25):
Basically the element here is that maybe you don't need
to do that. But I'm going to caveat all of this,
Nathan by simply saying, this is still experimental technology. This
is still just one example, and we also don't have
the full figures on what kind of chips they use,
just how much it's costing, and whether or not there
are others like it, or if this is just kind
of a one hit wonder. Those are still the questions
that remain in this market.
Speaker 2 (07:47):
This is Bloombery Daybreak, your morning podcast on the stories
making news from Wall Street to Washington and beyond.
Speaker 4 (07:54):
Look for us on your podcast feed by six am
Eastern each morning, on Apple, Spotify, or manywhere else listen.
Speaker 2 (08:00):
You can also listen live each morning starting at five
am Wall Street time on Bloomberg eleven three to zero
in New York, Bloomberg in ninety nine to one in Washington,
Bloomberg ninety two nine in Boston, and nationwide on serious
XM Channel one twenty one.
Speaker 4 (08:15):
Plus listen coast to coast on the Bloomberg Business app
now with Applecarplay and Android auto interfaces.
Speaker 2 (08:21):
And don't forget to subscribe to Bloomberg News Now. It's
the latest news whenever you want it in five minutes
or less. Search Bloomberg News Now on your favorite podcast
platform to stay informed all day long. I'm Karen Moscow.
Speaker 4 (08:34):
And I'm Nathan Hager. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak
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