Scott Shellady: US markets analyst explains why US experts are worried about DeepSeek

US stocks took a sharp drop - and experts are feeling wary - after a Chinese artificial intelligence startup posed a threat to America's technology industry.

DeepSeek unveiled a new ChatGPT-like AI model called R1 that operated at a fraction of the cost of OpenAI’s, Google’s or Meta’s models, causing the Nasdaq to plunge by 3.1 percent. 

US markets analyst Scott Shellady says the $5.6 million computing power cost will be concerning for investors, when compared to the hundreds of millions or billions US companies spent.

"The idea that there was any competition would have probably surprised people, which it did."

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Episode Transcript

Speaker 1 (00:01):
Where business meets inside of a business hour with Ryan
rich on News Talks NB. Good evening, it is seven
after six. Coming up, we have on the digital nomad issue,
Brad Olsen digging into the numbers for US, the Land
Corps sale, Jamie McKay, the CTU mood of the workforce,
and we're live in London with Edna Brady before the

(00:23):
top of the hour. Right now, US tech stocks have
taken a huge hit today. You would have seen this
in the news this after the Chinese AI company entered
the scene. Deep Seek is its name. It's an app
that claims to need fewer and less advanced chips to
make work now. US chip maker Nvidia lost six hundred
billion US dollars off its market cap in a single day,

(00:44):
and the NASDAK lost about three percent on the whole.
Scott she Laddy is a US markets analyst. Scott, Hello,
good morning our investors. I mean, obviously they're freaking out.
Are they right to freak ount?

Speaker 2 (00:58):
Yeah? I think it deserved a little bit of worry.
I mean we were pretty much price of perfection number one,
number two is until pre until probably last Monday. We
could go today the idea that there was any competition
with a probably surprise fee, which it did, but yeah,
they need to take heed. I'm not quite sure it's

(01:18):
the end of anything. We you know, there's not a
lot of folks that are going to pack the truck
up and connect with China. We have to take China's
word for a lot of it. But there has been
some reports that say that this Deep Deep seek is
is is the real deal. But they say that they
only spent five point six million dollars on it, when

(01:39):
we're spending one hundred million dollars in hours. They say
they've done it in a short time frame. All of
that stuff is still esoteric or you can't really you know,
put your finger on it, but it's something that needs
to be considered. And uh, you know, the amount of
money I think that really was getting people worried was,
uh the economics found of all these companies that are

(02:01):
getting involved with they I is that going to change
because they don't have to spend as much. I mean,
they're still going to sell a lot and video is
going to sell a lot of chips, but maybe just
maybe the price if I'm.

Speaker 1 (02:11):
Changed today, hugely significant time for this to be going
down as well, because you've got Meta and Microsoft and
all that coming out with their they're called a forcern
right this week. So so will this potentially affect their calculations?
Will it affect how they spend their money?

Speaker 2 (02:28):
It depends on how how how you know, how seriously,
how seriously investors take it. I mean, I think they
should take heed. About how how much heed they take
that's going to be the real debate. I mean, I
just don't see a ton of people backing up and
connecting with a Chinese product, especially now that we've got

(02:48):
this TikTok debate in this country for a year or two.
But I also do know that the we've had some
people here look at look at what they put out,
and it's the real deal. So so, however long it's
too going to make it in forever, how much it
took them to spend to make it could be up
for debate. But there is composition out there. So you know,

(03:10):
today and Video had the I think a seventeen percent decline,
which was the largest one data climb in the history
of our stock market. It was a six hundred billion
dollar market cap selloff. Okay, that's that's pretty significant. However,
if you look at the top ten and video owns
seven of the biggest selloffs, So we're in an environment

(03:32):
where things are pretty pretty valuable. Again, I think we
were priced to perfection two years ago and video was
up two hundred and thirty nine percent. Last year was
up one hundred and seventy one percent. So we shall see.
I mean, it's it's been a pretty heavy climb. It's
just probably, I think probably is this. It needs to
be taken seriously. But you don't need to throw the

(03:53):
baby out with the bath water. I still think there's
there's a ton of growth to be had there. But
maybe everybody get a little bit of a wake up
call so they say, you know that there might be
some competition.

Speaker 1 (04:04):
Donald Trump's come out and said basically this is a
good thing. I mean, and American companies should be looking
at this top of innovation and trying to emulate it.

Speaker 2 (04:12):
Well, I mean, there's nothing almost saying that. And I
think that, like I said about you know, TikTok and
the Chinese, there's a lot of skepticism in this country
about the Chinese and technology, and rightfully so, I mean
for years and years and years, this is what he's
been elected to do, by the way, because they've been
taking a lot of our intellectual property rights to the
tune of at least five hundred million dollars a year,

(04:33):
maybe a lot more. So there's still a lot of
skepticism there, but it does remind everybody that it wasn't
a straight shot to the moon. You know. These companies
don't these stock rights don't grow to the sky, and
I think that was a much needed sell up and
maybe there should be some more. We are going to
have a tech revolution, we are going to have an
artificial intelligence revolution, but maybe it's just not going to

(04:54):
be as expensive as everybody thought, and maybe that means
there's a lot more people that come to that party.

Speaker 1 (04:58):
Well, that does sound like a good thing. Scott, Thank
you for that, Scott Slady. He's a US markets analyst.
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