Mark Lister: Craigs Investments Partners Director on the impact of DeepSeek's AI model

A Chinese AI start-up's emerging as a threat to US tech companies and has sent their stocks in to a tailspin.  

DeepSeek has revealed an artificial intelligence model similar to services like ChatGPT, but built for a tiny fraction of their cost. 

It claims to have spent just $5.6 million on development compared to the billions ploughed into the tech by US counterparts. 

Craigs Investments Partners Director Mark Lister told Mike Hosking that if DeepSeek’s model is everything it claims to be, they’ll be able to run on less powerful chips. 

He says that the share prices for companies like NVIDIA had a huge amount of growth baked in on the assumption that everyone will need incredibly grunty chips to work, and DeepSeek’s claims bring that assumption into question. 

Lister says that it means the share price is potentially a little overcooked. 

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Episode Transcript

Speaker 1 (00:00):
The American market seems to have got over themselves this time. Yesterday.
Of course, the freak out over Deepseek was on this
tube and cheerful AI tool out of China that took
a lot of is my surprise New Zealand superannuation fund
that took a hit yesterday. In Vidia, of course took
a bath. Craig's Investment Partners director Mark Lister is with
us on this Marke. Very good morning to you.

Speaker 2 (00:18):
Morning, Mike, Hey, you going well?

Speaker 1 (00:19):
Thank you? What do you make of yesterday when it unfolded?

Speaker 2 (00:23):
It was a pretty big day, wasn't it. I guess
what was interesting was the reason for the moves, and
I guess the concentration of the moves. You know deep
seeks model. What surprised everybody is that it seems to
run on less advanced chips and they can seem to
do it with lower costs. So I guess that's a
good thing and a big picture sense. You think about productivity,

(00:45):
You think about some of the advancers with AI overall,
but not great for in Nvidia because they've obviously built
a business about selling these very very speedy chips and
with that stock having become the biggest in the market,
and having had a cracking run these last two years,
it took a bath, as did anything in that semiconductor space,

(01:07):
so a bit of a recovery today. But yeah, definitely
interesting what you're seeing out there.

Speaker 1 (01:11):
So what have we learned about in video? Are they
gouging the market and ripping us off or they just
don't know what they're doing compared to the Chinese when
it comes to making stuff.

Speaker 2 (01:20):
Now, I don't think it's that. I think it's that
the AI models. If these Chinese ones are everything they
claim to be, they will be able to run on
less powerful chips and obviously within video, which remember it
was up two hundred and forty twenty twenty three, then
it was up another one hundred and seventy in twenty
twenty four, so it's been a stellar run, and that

(01:42):
share price is baking in a huge amount of growth
on the assumption that everyone will need to buy these
really grunty chips to make all this new AI stuff work.
If that's not the case and his AI that can
run on slower chips and it's more efficient, then that
growth comes into question, which means the share price is
potentially a little overcooked.

Speaker 1 (02:03):
So how much of that? So it's a two part question.
How much of the Nvidio's story in general is based
on just sheer hypeer noise, kind of like Tesla stock
versus when you look at Deep Seek yesterday it's all
pro Chinese. It doesn't work that well anyway. It's a
bit basic. So what are we looking at? Are we
looking at the possibility or are we looking at reality?

Speaker 2 (02:23):
I think that's one of the questions that we don't
know the answer to just yet. To be honest, the
Deep Seak stuff it does look hugely exciting, and some
of the independent tests also support what they're telling us,
But it was a bit of a knee jerk reaction,
and I think you know in Video is not going
to become Beta Max overnight, is it. They've still got
a very strong business, Their products are exceptional, and I

(02:46):
think there's still as a real need for them. It's
maybe just become a little bit more vulnerable because of
the shaer strength of its share price performance over the
last year or two. Time will Tell.

Speaker 1 (03:01):
Always a pleasure, make appreciate it. Mark Listener, Craig's Investment
Partners directed

Speaker 2 (03:05):
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