By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley
This week, we learned that DeepSeek, a Chinese artificial intelligence (AI) startup, has developed two open-source large language models (LLMs) that can perform at levels comparable to models from Google, OpenAI, and Meta at a substantially lower cost. The news set off shockwaves in equity markets, wiping out nearly a trillion dollars in the market cap of listed US technology companies on January 27, with Nvidia losing nearly $600 billion of market value. While the market has recouped some of these losses, their magnitude raises questions for investors about AI, now widely viewed as the next transformative technology. My equity research colleagues have addressed a range of stock-specific issues (see here, here, here, and here, all available to pro subs). In this week’s Start, we step back and consider the broader implications for the economy in terms of productivity growth and investment spending on AI infrastructure.
