Deep Seek AI SMASHES the industry - Error Code 201

0:00 The entire AI industry got tossed on its fucking head this week. A Chinese company released a new AI model this week and it appears to be as powerful as anything the US AI industry has come up with so far and they've done it at a small fraction of the computing and, more importantly, the energy cost. This sent AI related stocks, most specifically Nvidia and a couple of energy stocks, just crashing on Monday. This happened just after the Trump administration announced Project Stargate, which is a $500 billion joint venture, to build a whole bunch of AI infrastructure that now they're starting to figure out they may not need. My question is, is this the greatest troll of the American tech industry by China ever? Or what do we make of not only the timing, but what this could mean with how efficient this AI model is supposed to be. Well, I will also say that. They were also able to supposedly there's a lot of question behind this, but supposedly they were able to develop this in like the course of I want to say like two months or something like in insane like span of time. Yeah. And then also a lot cheaper than. They know a lot of the American OpenAI or Meta or anybody who's working on it. Yeah. Yeah. Which honestly like kind of

1:31 makes sense because like as soon as one person kind of paves the way like others are going to find like cheaper ways to do it. But and the other reason I think that everybody kind of got caught off guard is so that the H100 chip that Nvidia makes, which is why their stock has been skyrocketing the last couple of years, is a primary driver behind especially chat GPT and open eyes work. Those are export controlled to China. So China's not supposed to have those. Now we're going to come back to that portion of the topic later. But supposedly that the big thing is they're saying, hey, look, you guys export control this. We found a way to do it without it. Right. The other interesting thing is they didn't just release it. They put it under MIT's open license. Yeah.

2:15 And said, everybody has access to the source code. You can do whatever you want with it. Right. which is huge. So they made it open source. They gave all the code away for free. Yep. And they were like, come at us, bro. Right. And they published a big technical document outlining how they did it. Obviously, Nvidia stock went way, way down. As of right now, it's recovered a teeny, teeny bit. But starting the week, it was at about one hundred and fifty bucks a share. And it's down to one twenty four. Oh, no. They lost. They lost 15 percent in market cap. So they at one point had lost six hundred billion dollars this week.

3:08 OK, that's actually. Yeah, that hurts. They gave it away for free. Straight. Yeah, free. And that's honestly, that's what I love. I so I don't. Coming from like the engineering point of view, I must say you are engineer. Yeah, I think this is great. I love open source stuff. When I was in college for my engineering degree, I used open source machine learning for my project. for my senior design. I, whenever something is open source, it kind of feels like, Hey, we are like, we're not so much like worried about profits. Like we're putting this technology out there to help, like, advance the technology. If that kind of makes sense. Yeah. Yeah. Like There could be some conspiracy theories out there of like, oh, they're trying to crash in a video. They're trying to crash the US stock market overall, though, as an engineer. So far of everything I've read and watched, I'm like, this is a good thing, like, because here's what's going to happen.

4:30 It's open source. So legit, every single US company that's involved in the AI industry is going to take their stuff. And in the next, I don't know, two or three months going to start using their research to advance their own A .I. like this is going to move A .I. forward. Like, yes, it's going to hurt stocks right now. But in like six months from now, like you're going to see some sort of leap in A .I. So I agree with you on that. And again, the fact that it's open source is is huge. Right. The thing that really interests me in a couple of ways about this is this. One of the big concerns about AI has been everything that we've had up to now requires an immense amount of power. Yes. All right. Immense amounts of energy to make it function. What I like about this, in theory, again, all of this grain of salt, I think it's going to take months before all this is run down. But in theory, this can be run on a local server. without the the crazy power demands, which, again, was concerning a lot of people who were worried about climate change and green energy and stuff like that, where it's like crap. You need so much energy to build this, you know, to do A .I. And now they're going and these Chinese guys are going, you really don't. Yeah. Like. If this is true,

6:02 if this is legit, real and not a Oh, God, I forgot the girl who promised the world that they could test for, like, every single disease in the world. Oh, yeah, yeah, yeah, yeah, yeah. I know what you're talking about. Elizabeth, what was the name of her company? I don't remember. I don't know. But like, if it's legit, like this is real, like this is huge. I, you know, I'll just say it. I'm an electrical engineer. I primarily focused on power generation. It's not what I'm currently doing, but. All my classes are around power generation.

6:43 No, this is huge like power. It's going to be one of the it's like the largest. I would say issue with electrical engineering right now is how do you keep up with the? I don't know ever increasing demand of power, you know. And so the fact that, like, China was able to find a way to do AI with less power is huge to me. I love it. I'm like, hell, yeah, let's go. And then, like, I read like 60 articles and it's like how horrible this is. But I'm like, I don't understand why it's bad. A lot of this, I think, is a lot of a lot of CNBC, Wall Street Journal trying to fluff up. Right. The the U .S. market.

7:30 Yeah. I got to imagine that that Monday morning, you know, Sachin Adela and Mark Zucker, all these guys were like, crap. Right. And I got to imagine they had their engineering teams grabbing the source code Monday morning going, you better figure out if this is actually working, because if it is, we're in, you know, necessity is the mother of invention. And it looks like the Chinese were like, hey, look, you you expert control these chips. You you tried to screw us. But between and the thing that I drew in my tick tock when I made a tick tock about this the other day was. Between the tick tock ban immediately being reversed and everything that happened there and then this immediately happening, it seems like every time the U .S. is like, look at us, look at us. They're like the Chinese right now are like. Double birds, baby, we got you. And I don't think our leadership is currently prepared for what's happening right now. I don't think we have the political or social will to deal with this. Adam Schiff was like, this is our Sputnik moment. I was like, you know what? You might be right. But if it is, we're screwed. We are screwed. Because if this is our Sputnik moment, we don't have the political leadership and social leadership to meet the moment. Right.

8:59 You don't have a JFK in there going, we're going to go to the moon by the end of the decade. You just don't have it. So from a political point of view, I do agree with you 100 percent. I do agree with you. From an engineering point of view. I would say like, yeah, hopefully it is our spunk spunk Nick. Right. Like, do you think we have? Actually, let me rephrase this a different way. Let's presume for a moment that our engineering talent is on par or maybe slightly better than that of mainland China. Yeah. Do we have the situation from a political and social standpoint?

9:49 I talk about the fact that, you know, we're in a capitalist society and that changes how you run business. Do we have the ability to put that engineering talent to work in an efficient manner where we can catch up if we are as far behind as we may be. This is this is a little tricky. Because honestly, like the the engineering side of me wants to be like. essentially like fuck our political leadership. It has nothing to do with it because we're still going to pay these people. We got to pay the engineers. You got to get them to do the work. But however, I will say, though, engineers. I'm trying to figure out how to phrase this. I, so I used to be asked like, Hey, is engineering hard? And I would say, no, engineering is not hard. Anyone can be an engineer like Alex. You could be an engineer.

11:02 Uh, your wife could be an engineer. Um, anyone can be an engineer. The thing about engineers though, is their dedication. So you have to put everything aside. And you have to find a solution period point blank. So There were there were days where you essentially you have to say there's a problem problem a whatever I'm not going to go to sleep tonight until I solve it period and With that you have to tell your friends like hey, I can't I can't talk right now. I can't hang out. I have to figure this out There were many nights which. And again, you have to you kind of make a trade off of like. You know, I will do whatever it takes to solve this problem.

12:01 I. There were many nights where I had no sleep and I stayed awake from chocolate chip cookies and monster energy drinks. Keeping myself awake. I went like two days with no sleep, literally just trying to figure stuff out. And I think like that, that's engineering is not hard, but most people do not have the dedication to do that. Most people want to go to college to party. Most people will give up after a while. And honestly, like my, my father like passed away while I was in college. I took one day. Away from college till I deal with that and then was like back to college like you have to have that mindset of like no matter what comes up. I do not care.

12:55 I do not care if the world's on fire. I don't care if Elon Musk deploys a Death Star into outer space. I am going to sit here. I'm going to figure it out. I'm going to find a way and kind of tying this back to your question Alex. That kind of mindset and there's people that take it way more like to the excrete to the extreme than I do I don't consider myself like some sort of genius You know person there's there's way like smarter people than me. There's way more dedicated people than me They would probably laugh and be like, oh you went without sleep for two days That's funny The thing about engineering is that you will find people that will just They will stay up and they will solve what like other people will say is like a pointless problem just to do it. So like Yes, it does suck it a hundred percent. I agree with you It does suck that we do not have the political leadership to back us on this. However Engineering is going to proceed.

14:04 It's going to push forward You're going to have companies and also just random engineers that are going to just take on the task themselves. They're not going to wait for the right moment to kind of present itself. I hope you're right. I have very little faith in us right now. That's my thing. I have so little faith in us. I just do. It sucks. But that's that's kind of where we're at. Anyway, what do you all think? Is this a big sea change? Is it the sea change we think it's going to be? Does this change the whole thing? What's going to be the next big troll coming out of China? Because I think that this is just their opening salvo. I think TikTok and deep sea is just the this. Just the surface of what they're about to hit us with. So let us know what you think. down in the comments below.