Wednesday, January 29

Today is Lunar New Year, primarily celebrated in eastern Asia. 2025 is the Year of the Snake, which is all about shedding old patterns and embracing new beginnings. Happy Lunar New Year to all of our readers who celebrate it!

The entire stock market took a major hit in recent days after the arrival of a revolutionary new Chinese AI known as Deepseek. Here's what happened and why the tech industry as a whole took such a massive hit.

DeepSeek, an artificial intelligence chatbot similar to OpenAI ChatGPT, had been in the works for a while before its release. Chinese hedge fund High-Flyer began funding the project in late 2023, and by 2024 they had released their first open-source large language model. Then, on January 10, 2025, DeepSeek released their first free AI application, and within two weeks, it had blown up in popularity. On January 27, DeepSeek-R1 surpassed ChatGPT as the most downloaded free app on the app store, and suddenly, the United States stock market took a plunge.

Nvidia, one of the world's most advanced chipmakers, has risen up the charts in recent years as well, and just three days ago, they had the highest market capitalization of any company in the world. Based out of Silicon Valley, the United States began restricting exports of Nvidia chips to China to prevent their development in the AI industry. In addition, Nvidia sells their current H100 chips at around $25,000 each, and their upcoming Blackwell chips are expected to fetch between $30,000 and $40,000 apiece.

However, DeepSeek gave out some crucial information upon their release to the United States which changed the AI industry. DeepSeek claims that they created their new AI with a mere $6 million, which is just a fraction of the $100 million OpenAI spent on developing ChatGPT. Furthermore, DeepSeek confirmed that the model was also built with less advanced chips and requires much less data center power to operate.

This shocked the stock market, as everything they believed came crumbling down. Practically every major tech company in the United States, from Amazon to Microsoft to Oracle, spent billions on Nvidia chips-- in fact, Microsoft alone bought over 485,000 Hopper chips from Nvidia. They had been building up their massive data centers and charging customers massive amounts of money for their AI services, but tech companies have started to realize that the key to AI is not money-- it is innovation.

Now that DeepSeek has confirmed that it is possible to create such a model with relatively small amounts of money, experts say that companies will most likely bring down their AI spending and begin working with what they have. Due to this, chip stocks like AMD and Nvidia took a massive hit; Nvidia alone lost over 18% of its value, shedding almost $600 billion in market cap in one day to create the largest-ever drop in market cap for any company in history.

The other Magnificent Seven tech stocks, which consist of Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla have also spent large amounts of money on AI development, leading their stocks to take a major hit. However, Apple remained relatively unscathed, as they have spent much less than their competitors on AI development.

Now, companies are expected to ramp up their AI development efforts, focusing less on spending and more on innovation. The arrival of DeepSeek has proved that the market for artificial intelligence is massive but extremely competitive, and companies will need to rapidly release new, more intelligent models if they are to stay alive in the AI race.

Fact of the Day (Reader's Digest): Men are much more likely to be colorblind than women. This is because the genes responsible for the most common type of colorblindness are found on the X chromosome. Even if women have the genes on one of their two X chromosomes, a properly functioning gene on the other one makes up for that loss. If men inherit the gene on their only X chromosome, they’ll become colorblind.

Quote of the Day (Gracious Quotes): You can’t sit on the sidelines of life. (Charles Barkley)

Word of the Day (Merriam-Webster): Sward (noun, SWORD) - Sward is a literary word that refers to an area of land covered with grass.

In a Sentence: The hikers emerged from the forest to find a green sward dotted with yellow and purple flowers stretching out before them.