Seeking Deep DeepSeek Perspective

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Stock market shockwaves were caused by DeepSeek, a Chinese AI startup. The Chinese company released of a new, highly cost-efficient AI model. The DeepSeed story underscores just how critical the technology has become — not just for Wall Street and Silicon Valley, but for America’s national security and global competitiveness. And it shows the artificial intelligence revolution is moving at lightning speed. AI is now a matter of national security - more on that thought below. The immediate impact of the January 27 DeepSeek news wiped away hundreds of billions of dollars of market value among leading U.S. AI infrastructure and technology companies. Nvdidia, the dominant player in AI chip design, saw its stock price swing wildly. The tech giant lost an astonishing $590 billion in market value as the DeepSeek story hit the market. The next day it had a rebound of $260 billion, only to drop again by $130 billion on day three of the volatile week in which the company's stock plunged 15.8%, its worst weekly showing since September 2022. For perspective on how enormous the market cap decline for Nvidia was on its initial reaction to DeepSeek, the $590 billion was equal to the entire value of Costco and Boeing combined. Why the extreme volatility? Claims were that DeepSeek’s AI model was built at a fraction of the cost of leading U.S. models. The Chinese company said that it cost only $5.6 million. This signals the potential for a new price war in AI. OpenAI’s ChatGPT and Meta’s Llama models have run on expensive high-end semiconductors made by Nvidia. For many investors, this raises at least two big questions: Are NVIDIA’s high-priced AI chips at risk of being undercut? Will AI’s profit margins shrink as efficiency increases? This is suddenly the great debate on Wall Street relative to AI investments. There are still more questions than answers. Perhaps more important, there is now the question of will America lose its leadership in AI and keep its edge in technological warfare and cybersecurity?

DeepSeek’s breakthrough isn’t just a financial story — it’s a national security issue. Supporting AI development, including the data centers that power it, is no longer just about business - it’s a matter of strategic importance. That may be in part why Trump announced the launch of Stargate, a $500 billion joint AI venture. The newly announced Stargate intends to invest $100 billion immediately into AI infrastructure in the U.S. This live broadcast unveiling of Stargate from the Whitehouse was just days before China made DeepSeek available to America over a weekend on Apple's App Store where it became the #1 downloaded app, surpassing OpenAI's Chat GPT. Was that release date a coincidence? Whatever it was, it was flawed as the insatiable demand for the app made DeepSeek a victim of a massive cyberattack causing it to shutdown. In general, its motives are being questioned and raising great concerns. Already a Wall Street Journal report shows in testing the Chinese app that it is more likely than other AI's to give instructions to do dangerous things. The Journal identified a DeepSeek social-media campaign to promote cutting and self-harm among teens. DeepSeek's impressive technically aside, it’s raised serious red flags. For myriad reasons, U.S. military service members have been warned not to use DeepSeek AI tools due to potential security risks. Just this Monday New York state banned the use of DeepSeek on government devices, citing concerns over data privacy. Texas was the first U.S. state to ban DeepSeek on government devices. Previously, Australia and Italy banned DeepSeek's use on official devices. While the U.S. has yet to formally block DeepSeek, the Navy and NASA have. The ability to train AI models more efficiently could shift the balance of power in how wars are fought, how intelligence is gathered and how cybersecurity threats are handled. This underscores why DeepSeek is a national security issue.

With the U.S. making AI a national priority, we’re seeing an unprecedented wave of investment into the technology sector. American tech giants are doubling down on AI investments. No doubt big tech's AI arms race is heating up. Meta (previously known as Facebook) has called 2025 a “defining year for AI.” The company is planning to invest $60–$65 billion in AI infrastructure alone. Google recently announced a $75 billion budget spend for AI. Add in $80 billion AI spending by Microsoft and $100 billion by Amazon, and that's $320 billion pledged spending on AI this year by just 4 companies. Reports show that the U.S. leads the world in AI monetization, accounting for 45% of global revenue, while China lags at just 2%. China wants more.

John J. Gardner, CFP®, CPM®
Blackhawk Wealth Advisors
3860 Blackhawk Rd, Ste. 160Danville, Ca. 94506
888.985.PLAN (7526)

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