海角大神

American stock markets shuddered on Monday, prompted by China鈥檚 announcement that it has created a capable, cheap, artificial intelligence machine. It鈥檚 the biggest cloud yet to darken the West鈥檚 blue-sky enthusiasm over AI, calling into question the efficacy of America鈥檚 export controls and the billions of dollars the United States is pouring into the technology鈥檚 expensive cutting edge.

China startup DeepSeek says its AI assistant uses less advanced chips than its rivals鈥� models do, and it costs less to train. Unlike the West鈥檚 billions, the Chinese model was developed for just $5.6 million, by one estimate.

鈥淎re we going to spend $500 billion to get to the frontier so that China can find a way to copy our homework for pennies on the dollar?鈥� asked Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies, on a podcast Friday.

On Monday on Wall Street, leading AI company stocks fell hard. The price of Nvidia, the leader in AI chips, plunged about 17%, as rattled investors evaluated the prospect that Chinese players could threaten U.S. tech profits. The S&P 500 fell nearly 1.5%, and the tech-heavy NASDAQ fell 3%.

But experts cautioned against panic. It鈥檚 important not to overstate the Chinese threat, analysts say. DeepSeek鈥檚 new AI model is both genuine achievement and Beijing hype. It shows China鈥檚 ability to simplify U.S. models, creating a way for fewer and less powerful computer chips to deliver answers that rival America鈥檚 more expensive models. DeepSeek said last week that its latest model can compete with a version of OpenAI鈥檚 ChatGPT released four months ago.

In many ways, DeepSeek鈥檚 model parallels China鈥檚 鈥渒nock-off鈥� manufacturing prowess. And in this case, DeepSeek has put its product on the public domain, which means anyone can use it for free. By Monday, it had become the top-rated free app on Apple鈥檚 app store.

Testing export controls, propaganda tools

DeepSeek positions China as a fast follower of American technology. But that鈥檚 a far cry from challenging the U.S. position at the cutting edge, analysts say.

The 鈥渃oncern is overstated since, based on available data, we believe DeepSeek鈥檚 model 鈥� relies on larger foundation models to be developed first,鈥� according to a Bank of America/Merrill Lynch research note on Monday. Followers, in other words, can鈥檛 be leaders.

The technology also serves as a propaganda tool for Beijing. By showing China鈥檚 capability, the regime hopes to prove that U.S. export controls don鈥檛 work. But analysts suggest that they merely show the failure of the 2022 export controls under President Joe Biden. Those controls have since been tightened.

It is perhaps no coincidence that DeepSeek announced it had put its AI software in the public domain last week after Mr. Biden issued three new rounds of export restrictions aimed at further curtailing China鈥檚 ability to access the most advanced chips.

鈥淎s the Land of Liberty, America 鈥� not China 鈥� must lead the world in the development of AI,鈥� then-President Biden said in his farewell address on Jan. 15.

Analysts say export controls can鈥檛 stop the flow of technology. But they can make it harder and more expensive for China to compete and keep up with the technology, especially with President Donald Trump鈥檚 new public-private joint venture that could invest up to $500 billion in AI infrastructure.

Public domain and silver linings for U.S. firms

And while putting DeepSeek鈥檚 model in the public domain was a propaganda win in the short term, it may backfire. U.S. companies now have the Chinese code to simplify their own search engines. And with better access to powerful chips, the Americans can create their own near-cutting edge AI models at much lower cost and offer them, perhaps, for free.

Which model will the global market adopt? Technology that might give the Chinese government access to their data? Or Western private-sector products where, presumably, geopolitical risks are lower?

The bigger question DeepSeek poses is for investors. If many companies can operate with cheaper, good-enough AI, how much investment should flow into the technology鈥檚 cutting edge?

At present, those investments are losing money. If history is any guide, it will take several years to turn a profit in an intense race that may winnow the leaders to one or two. Think Microsoft鈥檚 Windows in personal computers. Or Google in Web search.

One thing is sure. The DeepSeek cloud of doubt on investors鈥� horizon could grow if investors begin to weigh more carefully the promise of AI against the costs to create it.