Transcript
Ben Shapiro (0:00)
Well, folks, did China just drink our milkshake? China has a brand new AI model. It's called Deep Seek. And some people are comparing this technical advancement from China to Russia's Sputnik moment back in 1957 when they launched a satellite into orbit, shocking America's technological cadre. What exactly are we talking about here? Apparently, China has now released a brand new AI. It is called Deep Seek. This is an AI that was trained on chips that are way less sophisticated than the Nvidia chips that have been sort of the drivers of the AI revolution. So to review for just a second, for those of us who haven't been following AI very closely, artificial intelligence has progressed tremendously over the course of the last three to four years. Tremendously. If you've been following ChatGPT, it is so good at this point at pretty much everything. And it is only one step removed from being able to do many things in the real world. So, for example, if you use ChatGPT to put together a travel itinerary for any location on the globe, you can give it a prompt, it'll give you the travel itinerary. Right now you can't just hit book, but soon you will be able to do that. And AI is going to change how we do our jobs in so many different industries. It was assumed that America had a massive lead in the AI industry. Why? Well, because AI, working as it does of incredible levels of data, just reams and reams of data, has to use very sophisticated microchips, typically created by Nvidia and then produced at tsmc, which is an actual semiconductor factory over in Taiwan. And firms like Meta that have been investing billions of dollars into AI or OpenAI or Google. All of these various companies have been pouring billions of dollars into buying these Nvidia microchips that are designed in order to be able to process these huge quantities of data, because that's how AI actually works. The way that AI works is it crunches as much data as humanly possible. It works it through a matrix where it can actually determine which words in any given sentence are the most important. And then it predicts, essentially, this is how LLMs work, large language models. It then predicts what, what the next word in a sentence is going to be. This is why you can prompt ChatGPT to write you a joke about a duck in the style of Charles Dickens. And it will do that simply based off cramming extraordinary amounts of data takes huge energy, takes huge number of sophisticated microchips, or at least that's what everybody thought until a little bit earlier this week. This week, China released an AI model called Deep Seq. Deepseek is apparently just as sophisticated as ChatGPT, but it cost a fraction of the cost to produce. Instead of using Nvidia sophisticated microchips, apparently they were using less sophisticated microchips. That's the reason why Nvidia, which had been moved up to a trillion dollar market cap, it had grown massively. It's a 30 year old company, but only in the last three, four years has it spiked to that trillion dollar valuation. It dropped almost 20% in the stock market because suddenly it appears the barrier to entry in AI has dropped precipitously as well. It is less expensive than then thought to develop a very sophisticated AI. China was able to do it apparently based off chips that were not from Nvidia, which is why Nvidia's stock dropped. It's also why a huge number of stocks that were tied into American AI dropped as well. The idea is now there's a much more competitive sphere. According to the Wall Street Journal, technology stocks tumbled Monday on news that China's Deep Seq had trained a sophisticated artificial intelligence model at a fraction of the cost of its Silicon Valley rivals. China, triggering a sudden reversal of the recent AI rally. Nvidia, whose chips have been used to power many of the leading AI models, sank 17%. The move wiped out more than $590 billion from the company's market value and tarnished one of the stock market's brightest stars. The tech heavy Nasdaq composite slid 3.1%. The S&P 500 sank 1.5% after reaching a record last week. Now again, it's quite possible that AI was being overvalued, that all of these various companies were being overvalued, that it's sort of like the tech bubble in the late 90s, that a huge amount of money is being invested into AI. But it's not clear how much revenue is actually going to be generated by AI in the real world. So tons of money is now chasing a couple of sort of big hits. This happens very often when you have a speculative bubble that's created by a new technology and then the market tends to wipe out a lot of the speculation. And what you end up with are the long lasting gains from the technology. The dot com bubble of course did not end dot com. The the dot com bubble did not end the Internet. Instead, the dot com bubble was created by enthusiasm for an entire new wave of products. And it turns out that a lot of that enthusiasm was put in the wrong places. But it didn't mean the Internet didn't transform life. It did. The same thing is gonna be true of AI. So a lot of these stocks that are currently highly valued may be overvalued at this point. And the fact that China was able to develop Deep Seek without using Nvidia chips means, again, that many of these companies that were assumed to have essentially an oligopoly, that they were going to have enormous power in the AI market, maybe they don't have as much power as they thought they did, because it turns out the barrier to entry is now much lower. All in all, Monday's market bloodbath wiped out some $1 trillion from the stock market's value, according to the Dow Jones Market data. Now, as I said, some people, like Marc Andreessen, the investor, have been comparing this to the Sputnik moment. Sputnik, of course, is when the Soviet Union launched a satellite that orbited the Earth and shocked the Americans out of their complacence about their technological superiority. This is something very, very similar. America had assumed that we were way ahead in the world of AI, and that was particularly because of our control over the microchip sector via TSMC and Nvidia. And it turns out, not so much. According to the New York Times, this new chatbot created by Deep Seq is the talk of the AI world. Apparently, it works basically as well as ChatGPT, one columnist said. I spent the morning playing with the chatbot, asking it, along with OpenAI's, ChatGPT and Anthropics, clawed all the questions I could think of. After some initial toying, I was impressed. It was able to solve complex math, physics and reasoning problems. I fed it twice as fast as ChatGPT. When I asked it questions about computer programming, the types of job applicant might be faced with in a technical interview, its responses were as in depth and speedy as its competitors. Now, there are some problems with Deep Seq, and this is one of the reasons why America needs to win the battle for AI. Deepseek monitors all your data. If you use Deep Seek, it is doing the same thing that all other various Chinese companies do. It is mining your data to an extraordinary extent, the same way. The TikTok is a Chinese psyop that is designed to draw enormous amounts of American data to it. The same thing is true of Deep Seq. According to their user agreement, we automatically collect certain information from you when you use the services, including Internet or other network activity information, such as your IP address, your Unique device identifiers and cookies. We collect certain device and network connection information when you access the service. By the way, this includes keystrokes. It includes pretty much all data. You know that Deep Seek also is censoring like mad. Deep Seek will not allow you to ask questions, for example, about the Tiananmen Square massacre. So what does all of this mean? Well, according to President Trump, what this means is that it's a wake up call to American industry. Get competitive, get competitive. Now, here's President Trump saying it's a wake up call. He was speaking at the Congressional Institute yesterday.
