In view of this week's events, any contrarian investor worth their salt will be keen to determine the point at which flourishing “animal spirits” gave way to irrational exuberance.
Since last August you could be forgiven for thinking that some market commentators were gleefully anticipating a major correction to an overbought cohort of tech stocks. It appears some of that bearish sentiment may well have been justified after the launch of a lost-cost Chinese artificial intelligence (AI) alternative wiped billions off the value of US companies which have invested heavily in AI infrastructure, Nvidia (US:NVDA) chief among them.
China’s DeepSeek AI system, specifically its “R1” model, has overtaken rivals including ChatGPT to become the most downloaded free app in the US. But whether or not R1 is as efficient in broad-sourcing language models as its US rivals is probably less important than the fact that it utilises Nvidia’s older, less powerful chips (those not covered by US sanctions on China) and that it was apparently created at a fraction of the cost.