Latest / Early Edition with Ryan Bridge / Brad Olsen: Infometrics Principal Economist on DeepSeek and its impact on the stock market

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Brad Olsen: Infometrics Principal Economist on DeepSeek and its impact on the stock market · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: US tech stocks have been taking a hammering after the
• 0:02
  Speaker 1: debut of AI's new kid on the block, and it's
• 0:04
  Speaker 1: called deep Seek. Deep Seek as a Chinese tech firm
• 0:08
  Speaker 1: that's created its own budget AI model look at Ai
• 0:12
  Speaker 1: done by Temu Maybe, and it's said to be more
• 0:14
  Speaker 1: efficient and significantly cheaper compared to others on the market.
• 0:17
  Speaker 1: And it had impact on the New Zealand Superfund. It
• 0:20
  Speaker 1: caused Nvidia's stocks to dive seventeen percent yesterday. So I'm
• 0:24
  Speaker 1: joined by Inframetric CEO and principal economist Brad Olson. Hello, Brad,
• 0:29
  Speaker 1: good morning. Wow. Who saw this coming? This is a
• 0:32
  Speaker 1: bold move.
• 0:34
  Speaker 2: Oh, it's huge. And I'll tell you what yesterday was
• 0:36
  Speaker 2: a very easy way to lose money on the markets
• 0:38
  Speaker 2: without doing anything at all. So I mean it was
• 0:41
  Speaker 2: it was a bit of a market blood bath. I mean,
• 0:43
  Speaker 2: if you look at what had been happening though really
• 0:46
  Speaker 2: over the last year, last two years, is everyone has
• 0:49
  Speaker 2: been plowing some serious, serious money into AI and tech stocks.
• 0:53
  Speaker 2: This was the next big thing. It was the area
• 0:56
  Speaker 2: that the more that you put into which the more
• 0:58
  Speaker 2: you return, you were going to get out the other
• 1:00
  Speaker 2: because it was going to change everything. And then effectively
• 1:03
  Speaker 2: overnight you had deep Seek that came out and it
• 1:07
  Speaker 2: was purported that it costs six million dollars to train
• 1:10
  Speaker 2: compared to something like open AI's Chat GPT, which was
• 1:14
  Speaker 2: like one hundred million, and it was producing just as good,
• 1:17
  Speaker 2: if not better results, and everyone went, well, geez, why
• 1:20
  Speaker 2: am I investing these big sums? I better pull it
• 1:22
  Speaker 2: out now. So within the space of a day you'd
• 1:25
  Speaker 2: seen the likes of in Video with its big chip
• 1:28
  Speaker 2: and AI sort of focus lost six hundred billion US.
• 1:32
  Speaker 2: That's over a trillion New Zealand dollars, biggest single drop
• 1:37
  Speaker 2: that we've seen ever in terms of dollar terms. But
• 1:40
  Speaker 2: it's also interesting how quickly this has changed. Around Yesterday,
• 1:43
  Speaker 2: twenty four hours ago, the numbers were looking absolutely awful.
• 1:46
  Speaker 2: The likes that S and P five hundred was down
• 1:49
  Speaker 2: two percent. By today right here, right now, that market's
• 1:53
  Speaker 2: already recovered in general terms about half of that drop.
• 1:57
  Speaker 2: So still down, but really some big market reaction. Everyone
• 2:00
  Speaker 2: now trying to get a handle on how big is
• 2:02
  Speaker 2: AI and how much money do they want to put
• 2:05
  Speaker 2: into it.
• 2:05
  Speaker 1: Was it a surprise that China came up with such
• 2:07
  Speaker 1: a good little model.
• 2:09
  Speaker 2: Well, it seemed to be for a lot of the markets,
• 2:12
  Speaker 2: especially because there has been a much greater level of
• 2:15
  Speaker 2: control on some of the chips and some of the technology,
• 2:18
  Speaker 2: the semiconductors and the likes that have been going into
• 2:21
  Speaker 2: supporting greater and greater AI investment. And so the view
• 2:24
  Speaker 2: was that China shouldn't be able to do this, shouldn't
• 2:28
  Speaker 2: be able to come up with something nearly as good
• 2:29
  Speaker 2: because there are restrictions on this technology, which is again
• 2:33
  Speaker 2: why everyone went well, if China has managed to achieve
• 2:36
  Speaker 2: a superior product for cheaper with all of these restrictions
• 2:40
  Speaker 2: in place, then maybe it's not worth these companies that
• 2:43
  Speaker 2: are making these chips and semiconductors. Maybe they're not worth
• 2:47
  Speaker 2: the money that everyone's pumped into them. And I think
• 2:50
  Speaker 2: this is going to be probably one of the challenges
• 2:52
  Speaker 2: for the next couple of years, is that everyone's trying
• 2:55
  Speaker 2: to figure out just how big or how important a
• 2:57
  Speaker 2: new category is. It to be clear, Andrew, we saw
• 3:01
  Speaker 2: this last year in January where during the World Economic
• 3:04
  Speaker 2: Forum and Davos, a lot of business leaders were saying, look,
• 3:07
  Speaker 2: AI's big. AI is important, but I don't quite know
• 3:10
  Speaker 2: how to use it in my company. All of a Sudden.
• 3:12
  Speaker 2: We had a big sell off them as well, which
• 3:14
  Speaker 2: recovered in a couple of months. So it's just a
• 3:16
  Speaker 2: bit of recalibration going on where people are going. Look,
• 3:19
  Speaker 2: we've probably overestimated just how absolutely amazing we think AI is.
• 3:24
  Speaker 2: We've just got to sort of now recalibrate just how
• 3:27
  Speaker 2: important and how much money we're willing to put in.
• 3:30
  Speaker 1: Good Toods, Brad Olsen from Informatrics, I thank you so
• 3:32
  Speaker 1: much for your time.
• 3:34
  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
• 3:37
  Speaker 2: to news Talks it'd be from five am weekdays, or
• 3:40
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