Nasdaq accelerated its decline in pre-market, markets are currently trading 1.5% below Friday's closing values.

The reason - an unknown Chinese startup DeepSeek, which according to the project's authors was literally written as a side quest during the downtime of graphics cards at a hedge fund.

The hedge fund purchased a lot of graphics cards for calculating machine learning models to help predict stock market direction, and during downtime decided to use them to train their own AI model.

Result - a total of $10M spent, benchmarks that often exceed OpenAI, as well as

-96% of the costs to produce 1M tokens.

Deepseek - $2.19 / 1M tokens

OpenAI - $60 / 1M tokens

OpenAI also has 22 times more employees, and its funding history included 10 rounds and $18B raised capital.

While we observe the response, banning the number 1 app in the APP store, an app that runs on iPhone 16 / Android phones independently and proves that graphics cards are not so necessary for locally running AI models - could hit the AI startup industry hard / affect NVIDIA's sales results

SalienceXBT also wrote well about the current situation:

"- the pace of capital investment by tech companies in purchasing NVIDIA chips is growing very rapidly to unprecedented levels, and people feel that this is a bubble

- venture investments in teams/labs developing artificial intelligence models are approaching yearly maximums

- the question being asked is where/what is the return on investment in this and the path to profitability with $100 billion++ in capital investments.

- technology investors and mag7 are trying to justify this by claiming that profits will not come from earnings but from increased productivity through the use of AI in workflows

DeepSeek is emerging:

- they released a very powerful open-source model, practically free to use, that can be run at home

- this threatens numerous investment return opportunities for the tech giants that have invested so much money

- but the broader picture in my view is this: there are so many opportunities in artificial intelligence, but no one is creating anything that could change the game to take advantage of the reduced cost of inference, subsidized by all the giants currently.

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