The technological landscape is continuously evolving, and with it, the emergence of groundbreaking innovations is both thrilling and dauntingRecently, the release of a new large-scale model by DeepSeek has reverberated across global technology and financial sectors, stirring a significant debate about the trajectory of artificial intelligence (AI) investments and their impact on economic productivityThis situation serves as a cautionary tale against the distractions within financial markets, which at times seem to prioritize profit-making schemes over genuine advancements that can enrich human productivity.

On January 27th, it was reported that DeepSeek achieved major strides in the AI domain, casting doubts on the exorbitant investments directed towards developing large language models, particularly in the U.S. stock marketAs a result, a wave of skepticism washed over investors, prompting them to offload shares of major technology firmsAmong the hardest hits was Nvidia, whose stock plummeted by an astounding 16.97% in a single day, leading to a staggering loss of nearly $600 billion in market capitalization—setting a record for the largest single-day loss for a publicly traded company in the U.S.

Since the rapid rise of ChatGPT in 2022, a prevailing mindset characterized by a "compute-gathering" paradigm has taken root in the AI service sectorThis perspective promotes the idea that superior performance necessitates higher investment to cover the escalating costs associated with model trainingTherefore, when DeepSeek entered the conversation with claims of achieving “1/18 the training cost, 1/10 the team size, and equivalent model performance,” the impact was profound and caught many by surprise.

Analysis indicates that DeepSeek’s approach demonstrates an extreme efficiency in utilizing “limited resources,” which is poised to disrupt existing investment logic within the AI supply chain and reshape distribution of investment opportunities

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However, the recent trend in the Western financial markets warrants cautionThe rampant speculation surrounding AI technologies has transformed artificial intelligence into a mere profit tool for financiers, veering away from its original intent of propelling human productivityThis distortion of AI's essence could have far-reaching negative implications for both global economies and societal systems.

Since 2022, a surge of AI-related startups has proliferated worldwide, and many have managed to secure vast amounts of funding despite lacking mature products or viable business modelsStatistics demonstrate that funding for global AI startups is projected to surpass $100 billion by 2024. Alarmingly, much of these investments have not contributed toward technological development or product innovationInstead, vast sums have been funneled into market speculation and capital maneuversThanks to the inviting halo effect surrounding ChatGPT’s performance, AI stocks in the U.S. market have experienced notable upward momentumNvidia's share price soared by 177% in 2024, and the company witnessed an increase in market capitalization of more than $2 trillionThe stocks of other tech giants including Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and Nvidia have also experienced substantial growth.

However, the burgeoning escalation of tech stock prices raises pertinent questions about whether the AI narrative has been excessively hypedAnalysts caution that several AI-related firms exhibit inflated price-to-earnings ratios, suggesting that the market's expectations concerning their profitability may be excessively optimistic and concealing significant risks beneath the surface.

The prevailing Western narrative suggests that under the guidance of advanced technologies from Western tech companies, a utopian era of AI benefiting humankind is poised to unfoldYet, history shows that overblown expectations often provoke a cruel backlash from realityMany tech companies have proclaimed impending transformations for years but remain ensnared in the optimization phase

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For instance, Meta's foray into the metaverse, which saw an investment of over $10 billion, still grapples with fundamental challenges, such as achieving satisfactory hand-tracking accuracy, rendering the aspirational metaverse somewhat elusive.

An emerging critique suggests that the cyclical phenomenon observed in the U.S. stock market, where “technology has yet to arrive but valuations soar,” exposes the reality of financial capital's application of AI akin to “financial alchemy.” Here, technology has not been leveraged for enhancing productive forces, but rather serves as a temporary narrative for sustaining inflated market valuationsCompounding this issue is the behavior of many investors—who, drawn by the hype, neglect comprehensive analyses of company fundamentals and profitabilitySuch irrational investing often leads to substantial financial losses.

Drawing parallels to the dot-com bubble over two decades ago, a similar frenzy of speculative investment preceded the bursting of that bubbleThe tech stock bubble of the early 2000s was characterized by rampant hype and unsustainable price surges, resulting in severe market corrections that inflicted significant damage on the U.S. economyToday, an analogous scenario looms with respect to AI-related stocks within the U.S. financial marketsIf unaddressed, this speculative fervor risks paving a path toward inevitable financial despair, reminiscent of the cautionary phrase: “those who do not learn from history are doomed to repeat it.”

Ultimately, the narrative surrounding AI investments is an unfolding saga filled with both excitement and forebodingThe central challenge lies in recalibrating expectations and recognizing the importance of sustainable technological advancements that can genuinely enhance human productivity rather than merely serving as fodder for financial speculationThe onus rests upon investors to prioritize informed decision-making, shifting focus from the allure of quick returns to a deeper understanding of companies’ core competencies and long-term viability

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