China's Open AI - A Threat To Big Tech

For months now, Wall Street has lived on the hopes and aspirations of a new technology, Artificial Intelligence. AI promised to take these highly profitable companies to the next level.

China's Open AI - A Threat To Big Tech
The Floor of the New York Stock Exchange

For months now, Wall Street has lived on the hopes and aspirations of a new technology, Artificial Intelligence. AI promised to take these highly profitable companies to the next level. The big six were already the most valuable financial assets on the globe. Three were valued at over $3 trillion (Nvidia, Apple, and Microsoft), two over $2 Trillion (Amazon and Google/Alphabet), and the “low priced company (Meta) at over $1 Trillion.

Keep in mind that its only been within a little more than a year that any company had a market value of over $1 Trillion. And yet here are six, all over that benchmark $1 Trillion.

The promise of AI was that these high tech giants would leverage its new capabilities to even greater heights. It was just the sort of vision that Wall Street relishes — a future of greater and greater profits!

Of course, there were some details that needed to be worked out before this nirvana would be realized, namely how to profit from AI’s superior capabilities. This has been the one overarching issue with most of the internet. You see it with many of the major newspapers and magazines as they’ve sought to “go online.” Papers like the New York Times and the Wall Street Journal are only available to paying subscribers.

Well, no worries thought the Big Six, we’ll just follow the subscription model, charging customers for exclusive access to our AI. Certainly, everyone will want this incredible product.

And up to this point, that’s certainly been the case. Look at the astute way in which Microsoft transformed the open-sourced and not-for-profit “Open AI” into a newly reorganized (as of 2019) “Open AI Global.” Microsoft, one of the most profitable companies in existence and a major player in the Trillion Dollar Club, had solved the open source issue. With Microsoft in the lead, the rest of the Big Six would follow the subscriber model to unlimited profitability.

Wall Street understood this, and for months has charged into the “AI Revolution.” Analysts have spend hours multiplying future earnings into a higher and higher stock market.

That is until today…

Over the weekend, China introduced “DeepSeek R1,” its all-new AI product.

Expert computer technicians tell us that DeepSeek R1 is at least as capable as ChatGPT. But that’s not the real issue. What’s at stake here is that DeepSeek R1 is entirely open source, there’s no charge at all for using it. And anyone around the world can use DeepSeek.

That loud boom you here from Northern California is the hope of trillions in unrealized profits, suddenly gone out the window. If there is one thing that Silicon Valley is allergic to, its “open source.” In one fell soup China has just exploded an income stream that was designed to last for a generation. Gone are the profits, gone are the countless future subscribers, gone are the Big Six’s future revenue.

This is a watershed moment. Something that only comes around very rarely.

Today, you’re seeing both Wall Street and Silicon Valley caught completely off-guard. Sideswiped by a novel new approach from a Chinese source most did even think was “in the game.” A most unpleasant surprise that’s likely to affect the nation’s financial markets for weeks, if not months, to come.

China’s “Open Source” has shaken the Big Six and Wall Street to their very core.

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Jamie Larson
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