Month: January 2025

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AI invest

Wall Street panic over DeepSeek exaggerated; Nvidia shares suffer historic record loss

On Sunday, I wrote that DeepSeek-R1 was a revolutionary, good and cheap AI product from China. But I had no idea that a day later Wall Street would react as if aliens had launched an attack on our planet.

The homepage of the Wall Street Journal on 'the day after' the DeepSeek crash

Yesterday, the technology sector experienced a sharp downturn, to put it mildly, with the chip sector hit the hardest. Nvidia's share price fell 16.9%, resulting in a loss of $593 billion in market capitalization. Broadcom saw a 17.3% drop, accounting for a loss of $198 billion. Advanced Micro Devices (AMD) lost 6.3%, a loss in value of $12.5 billion. Taiwan Semiconductor Manufacturing Company (TSMC) fell 13.2%, down $151 billion, and shares of Arm Holdings fell 10.2%, a $17 billion hit. Marvell Technology experienced the steepest decline, losing 19.2%, a whopping $20 billion. 

Apple smiling third

The drop pushes previously high-flying chipmaker Nvidia to third place in total market cap, behind Apple and Microsoft. Last Friday, it was still in first place. Apple now has the highest market value with $3.46 trillion ($3,460 billion ), followed by Microsoft with $3.22 trillion and Nvidia with $2.90 trillion. Shares of Apple, which has less exposure to AI, rose 3% Monday, while the tech-heavy Nasdaq fell 3%.

Apple's rise is similar to a house rising in value because the neighbor's roof is on fire. Intrinsically, of course, nothing has changed in Apple's value, and a trade war with China still lurks, which would hit Apple hard. Bur that's for another day.

Barron's was the voice of reason yesterday

DeepSeek hits Wall Street

Investors blame the sell-off on the rise of DeepSeek, a only one year old Chinese company that last week unveiled a revolutionary Large Language Model (LLM), named DeepSeek-R1. DeepSeek's model is similar to existing models such as OpenAI's ChatGPT 4o or Anthropic's Claude, but is said to have been developed at a fraction of the cost. It also costs a fraction for customers compared to ChatGPT and Claude.

This has rightly led to concerns in investor circles that the U.S. strategy of heavy investment in AI development, often referred to as a "brute force" approach, is becoming obsolete. This brute force method uses extensive computing power and large data sets to train AI models, with the goal of achieving higher performance due to its massive scale. It is a billion-dollar approach that I wrote about earlier.

DeepSeek 'the Sputnik moment for AI'

A Wall Street Journal editorial clearly summarizes the competitiveness of DeepSeek-R1 with a catchy example:

"Enter DeepSeek, which last week released a new R1 model that claims to be as advanced as OpenAI's on math, code and reasoning tasks. Tech gurus who inspected the model agreed. One economist asked R1 how much Donald Trump's proposed 25% tariffs will affect Canada's GDP, and it spit back an answer close to that of a major bank's estimate in 12 seconds. Along with the detailed steps R1 used to get to the answer."

Venture capitalist and former entrepreneur (Netscape) Marc Andreessen described the launch of DeepSeek-R1 as the Sputnik moment for AI; similar to the moment the world realized the Soviet Union had taken a lead in space exploration.

OpenAI reacts anxiously

OpenAI CEO Sam Altman put on a brave face:

"DeepSeek's R1 is an impressive model, particularly around what they're able to deliver for the price. We will obviously deliver much better models and also it's legitimately invigorating to have a new competitor! We will pull up some releases."

(I myself took the liberty of inserting the capital letters Altman avoids, because otherwise I find it too annoying to read.)

Altman puts on a brave face, but in the last sentence it appears that OpenAI is accelerating product releases under pressure from DeepSeek. Or without capital letters just like him: altman blinked. Legit, you know, bro.

Sweat-soaked body warmers

They need to exhale and tuck in their body warmers up: a
 on Wall Street. The claim that DeepSeek developed their R1 model with only a $5 million investment is not verifiable, and the Chinese media are not known for their transparency, nor for their critical approach to Chinese initiatives.

Western companies are unlikely to adopt Chinese AI technology, with all the geopolitical tensions and regulatory constraints, especially in critical sectors such as finance, defense and government. Chief Information Officers are increasingly cautious about integrating Chinese technology into critical systems. In fact, it only happens now if there is no other alternative.

Despite recent market volatility, major technology companies such as Microsoft, Google, Amazon and Oracle continue to rely on high-performance chips for their AI initiatives. No company is canceling its orders with Nvidia because DeepSeek has a different approach.

Because there is currently no Western equivalent of DeepSeek's R1 model that is fully open-source (as opposed to "open-weight," a term I discussed in my Sunday edition ), these companies will continue to invest in expensive hardware and huge data centers.

This means that shareholders in companies such as Nvidia and Broadcom can expect a recovery in stock prices in the coming months, perhaps weeks.

This is how the main victims of the DeepSeek crash closed on Wall Street yesterday

Panic at the vc's

The real impact of DeepSeek's innovation will likely be felt more profoundly by venture capital funds that have poured billions into AI startups without clear revenue models or, as VCs always so delightfully know how to put it from the comfort of their armchairs: a clear path to profitability.

Earlier I highlighted the precarious financial situation of OpenAI, which seems headed for a $15 billion loss this year: that's $41 million per day, $1.7 million per hour and $476 per second. Partners at Lightspeed, which last week invested $2 billionin Anthropic, the developer of DeepSeek-R1 competitor Claude, at a valuation of as much as $60 billion, will have slept terrible last night.

Does DeepSeek dare a frontal attack?

DeepSeek's approach to AI development, especially its emphasis on efficiency and the possibility of local implementation, running the model on your own computer, is remarkable. But globally, the AI community can only benefit from this methodology if DeepSeek chooses to release its underlying code and techniques. So far, DeepSeek-R1's codebase has not been made public, raising questions about whether it will ever be. It's the difference between open-weight and open-source I wrote about on Sunday.

If China decided to fully open-source DeepSeek-R1, it would pose a massive challenge to the U.S. tech industry. An open-source release would allow developers worldwide to access and build upon the model, greatly reducing the competitive advantage of U.S. companies in AI development.

This could lead to a democratization of advanced AI capabilities, reducing reliance on closed models such as from OpenAI and Anthropic and expensive infrastructure such as from Nvidia, Oracle, Microsoft and Amazon Web Services. Such a move would totally disrupt the current market dynamics and force U.S. companies to completely change their strategies in funding AI research and development.

China rules, Wall Street pays

How big an impact the technology sector has on the U.S. economy was once again evident yesterday when the total loss on Wall Street was estimated at a trillion dollars: a staggering thousand billion dollars.

It leads to the ironic conclusion that the first week of "America First" President Trump ends with a moment when China can determine whether to throw the U.S. economy into disarray. Wall Street is now watching every move from Beijing like a dear in the headlights.

Categories
invest technology

Tech stocks boring in Trumps first week

Tech bros were looking forward to Trump's first week in office, but the stock market was boring.

BATMMAAN shares, comprising Broadcom, Apple, Tesla, Microsoft, Meta, Alphabet (Google), Amazon and Nvidia, have shown a mixed picture in the stock market over the past week. While some companies saw slight increases in their value, others experienced declines, underscoring the volatility within the technology sector. Thus, the first week of tech and crypto-franchise Trump ended somewhat tepid.

Apple and notably Tesla, one of the companies of Trump's hypeboy Elon Musk, both fell sharply. The rest of the tech bros had no cause for great celebration either. Meta shares rose six percent, but Meta in particular, with its open source project Llama, is being hit hardest by the launch of DeepSeek. In fact, there is already talk of "panic mode" at Meta.

While you would think that Nvidia would benefit greatly from Stargate's announcement (because who else is going to supply the chips for its intended high performance computing), many investors seem to think that Nvidia is threatened by Stargate. I offer no advice and make no predictions, but with Nvidia's next quarterly earnings report, there is a good chance that investors will want to join the Nvidia party once again. 

As General Magic experienced almost thirty years ago, the right timing is crucial when introducing mass-market technology. The question is how soon it can be determined whether all the billions invested in AI will yield the intended financial and social returns. For now, we live in a reality in which Stargate's announcement seems as credible as the U.S. annexation of Greenland. 

Categories
crypto

Trump-coin rose first, then became the biggest loser

Trump wins the presidency but topped the list of losers in crypto, with Fartcoin hot on its heels. 

Here comes a sentence I had hoped never to have to write: this is the website of the official memecoin of the President of the United States of America.

I looked for the definition of a memecoin, just to be sure: 

A memecoin is a cryptocurrency named after characters, individuals, animals, artwork or something else, with the intention of being humorous, light-hearted and attracting a user base by promising a fun community. 'Humorous, light-hearted and works of art in a fun community,' are indeed the core values of Donald Trump's MAGA world. 

The circus began with the launch of the $TRUMP token on the Solana blockchain last Friday, resulting in a rise in value of more than eleven hundred percent, from six to seventy-five dollars within a day and a half. Currently, the price is around thirty dollars. 

The $TRUMP token is managed by two entities, CIC Digital LLC and Fight Fight Fight LLC, which collectively own eighty percent of the token stock. Details about the exact split between these entities and Trump's personal share remain unclear. At the maximum value of the Trump-coin, many media outlets cited an estimated valuation of fifty-eight billion dollars.

Market cap versus FDV

Once again, it appeared that many journalists don't understand the difference between theory and reality when it comes to the economic value of stocks or crypto-currencies. CNBC went completely off the rails and headlined, "Trump's crypto-driven inauguration weekend makes first family billions of dollars richer.

Let's use the Trump-coin, so it actually has some use, to determine the difference between market capitalization and fully diluted valuation (FDV), two concepts essential to understanding the potential value of cryptocurrencies:

  • Market capitalization (market cap): this variable reflects the active market value by multiplying the current token price by the number of tokens in circulation. So for $TRUMP, with two hundred million tokens in circulation of about thirty dollars, the market cap is about six billion dollars.
  • Fully Diluted Valuation (FDV): FDV estimates the total potential value if all one billion tokens were in circulation at the current price. For $TRUMP, this theoretical value is thirty billion dollars (one billion tokens × thirty dollars).

FDV assumes that the token price remains constant as supply grows, but in reality the price often falls when supply increases because demand usually does not keep pace. This makes FDV a less reliable metric compared to market capitalization, which provides a more realistic and current valuation. 

That's why sites like Coinmarketcap and Coingecko primarily use market capitalization, as opposed to, say, CNBC. So the difference between those two methods leads to a valuation of six billion for the Trump-coin, or thirty billion. See the left column on Coingecko. That's quite a difference.

No scam

Critics, as expected, accused Trump of deception or, even worse, scam. "I wouldn't call this a scam," said Om Malekan, an associate professor at Columbia Business School. "To me, something is a scam only when there is deception. Here there is no deception." Malekan is referring to the fact that a memecoin, by definition, has no intrinsic value because there is no underlying revenue or profit on which to base the price. It is total speculation.

Incidentally, the difference between market cap and FDV was aptly explained years ago by British comedian Jethro, who explained to his son the difference between theory and reality. 'Your mother says she would sleep with the plumber for a million and so would your sister. So in theory we are at two million. In reality, we live under one roof with two slappers.'

Categories
AI technology

DeepSeek revolutionary: good, cheap AI product from China

OpenAI launched the AI agent Operator, initially useful for messenger and shopping services, while scientists such as Jan Leike and Nobel Prize winner Geoffrey Hinton are again warning of dangers of AI. Image created with Midjourney.

DeepSeek-R1, a new large language model from Chinese AI company DeepSeek, with a website that looks like a sleep-deprived intern pressed "enter" too quickly, has attracted worldwide attention as a cost-effective and open alternative to OpenAI's flagship o1. Released on Jan. 20, whether or not coincidentally on the weekend that "tout Silicon Valley" was eagerly clinging to the coattails of power in Washington, R1 excels thanks to "chain of thought" reasoning which mimics the problem-solving ability of humans.

Unlike closed models such as OpenAI's o1 and Anthropic's Claude, which this week raised another $2 billion from investors who are throwing pudding against the wall in AI hoping that some of it will stick, R1 is open-weight and published under an MIT license. That means anyone is free to build on the architecture. Unlike open source, the source code and training data used to build DeepSeek-R1 are not public, 

The model was developed for just five million dollars through algorithmic efficiency and reinforcement learning, significantly less than o1, despite U.S. export restrictions on advanced GPU chips, especially from Nvidia, on which U.S. competitors are primarily developing. Its affordability, with API costs more than ninety percent lower than o1, thus makes advanced AI more accessible to researchers with limited resources. It also offers a free chatbot interface with Web search capabilities, surpassing OpenAI's current features.

'Everyone is freaking out about DeepSeek'

By matching or even surpassing o1 in some benchmarks, R1 has highlighted China's advance in AI development. Its sudden rise has sparked discussions about the future of open, accessible AI and the need for international cooperation to move forward responsibly. 

International reactions to DeepSeek-R1 ranged from respect to dismay. Nature was analytical: 'DeepSeek-R1 performs reasoning tasks at the same level as OpenAI's o1 - and is open for researchers to examine.' MIT Technology Review remained tidy: 'The AI community is abuzz about DeepSeek R1, a new open-source reasoning model.' But VentureBeat said out loud what all of Silicon Valley was thinking: 'Why everyone in AI is freaking out about DeepSeek.'

By the way, anyone who asks DeepSeek about Tiananmen Square gets the reply, 'I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.' Asked about the situation of the Uyghurs, a very elaborate answer first appeared that even used the word genocide, but a few seconds later that text was replaced by: "Sorry, that's beyond my current scope. Let's talk about something else.' DeepSeek wants to keep things light and breezy.

Stargate historic project in AI infrastructure

The focus on China's DeepSeek led to great chagrin from the American techno-elite, who wanted to use this very week to underscore American supremacy. OpenAI, Oracle, Japan's SoftBank and Emirates-based MGX are funding the Stargate Project, a $500 billion initiative described as the largest AI infrastructure project in history.

Announced by President Trump in the Oval Office, its goal is to build advanced data centers for AI in the US, which Trump says will create a hundred thousand jobs. They are a kind of Delta works forAI. The project currently has one hundred billion dollars in direct funding, with the remaining investment spread over four years. The first huge data center will be built in Texas.

It already led to bickering over Stargate funding between OpenAI CEO Sam Altman and Elon Musk. Forbes even made a timeline of the ongoing fitties between Altman and Musk, who should get into a boxing ring or a hotel room.

Will the real MGX please rise

In all the excitement, it was especially comical that overexcited investors bought the wrong stock in the belief that it is part of Stargate: biotech company Metagenomi (symbol: MGX) saw its share price shoot up even though it is not involved in Stargate. The MGX that does participate in Stargate, Abu Dhabi's sovereign wealth fund, this MGX, will have watched on in wonder.

It would be some feat if Trump succeeds in getting foreign investors to invest hundreds of billions in U.S. infrastructure with MGX and Japan's Softbank, without the U.S. taxpayer contributing. Investor Bill Gurley (Uber) publicly question ed the public-private partnership, which is unusual by American standards. The main question is whether Stargate will be accessible to all and who ultimately makes the decisions. OpenAI CEO Sam Altman often has problems with governance.

OpenAI with AI agent: Operator

In all the fuss over DeepSeek and Stargate, the news was snowed under that OpenAI this week introduced Operator, an AI agent that can independently navigate Web browsers and perform tasks such as online shopping, booking travel and making reservations. It marks the moment when AI agents are making their entrance into the mass market.

Operator uses OpenAI's Computer-Using Agent (CUA) model, which mimics human interactions with Web sites by using buttons, menus and forms. OpenAI is working with companies such as DoorDash, Uber and eBay for Operator to ensure it complies with their terms of use. 

Despite all its potential, Operator has limitations with more complex tasks such as banking and complex web interfaces or CAPTCHAs. Right now, unfortunately, it is only available to U.S. users on the ChatGPT Pro subscription of two hundred dollars a month, so I have not been able to test it myself.

Operator an echo of General Magic

OpenAI's Operator, nearly thirty-five years after the fact, is very reminiscent of the legendary company General Magic, known for the description as "the most important company to ever come out of Silicon Valley that nobody ever heard of. All of Operator's marketing copy seems to duplicate General Magic's slogans and claims from the early 1990s.

In the end, General Magic, which attempted to create a handheld computer with agent features before the Internet and digital mobile telephony got to mass adoption, proved too far ahead of its time. Like General Magic, Operator strives to integrate seamlessly into users' lives and function as a personal assistant and productivity booster.

For fans: a fine documentary was made about the rise and fall of General Magic, of which this is the trailer. The team behind General Magic was so special that dozens of books have been published and even a real feature film has been made in which they starred: Andy Hertzfeld was a prominent member of the team that developed the Apple Macintosh for Steve Jobs, after General Magic Tony Fadell became the developer of the iPod and co-creator of the iPhone at Apple, and Joanna Hoffman is such a special person that Kate Winslet went to great lengths to play her in Danny Boyle's film about Steve Jobs.  

Leike and Hinton with different warnings

In all the publicity about DeepSeek, Stargate and AI agents, the fact that two leading AI scientists once again warned against the misuse of AI with potentially disastrous consequences for the world snowballed. Professor Geoffrey Hinton, a leading figure in AI and winner of the 2024 Nobel Prize in Physics, discussed the risks of rapid AI developments in a fascinating conversation with his former student Curt Jaimungal. 

Hinton has frequently warned that AI could evolve and gain the motivation to make more of itself and autonomously develop a sub-goal to take control of the world without regard to humans.

The German Jan Leike, co-founder of OpenAI where he left disappointed, now puts it this way:: "Don't try to imprison a monster, build something you can actually trust!" I previously wrote extensively about Leike and Hinton's warnings in this blog post. 

Categories
Tips

Sony in trouble with Soneium blockchain, presentation tips, healthy aging and top entertainment

Today I am sharing an overview of what has caught my eye in the period since my last newsletter in December.

Sony launches Soneium Blockchain, starts censoring

How difficult it is to get it right in the Web3 world now also knows Sony, which experienced a very troubled launch with accusations about blocking meme-coins. The vehement reactions from the Web3 community show how complex it is to reconcile a decentralized ideal with corporate policies.

Smart government at Singapore's Hawker Centres

It is too easy to always complain about the government; more fun is to look at where governments do smart things. For example, why does the Singapore government intervene in one of the most beloved culinary traditions? No, I am not referring to the three hundred dollar fine for not clearing your plate. To maintain the tradition that the people of Singapore can eat delicious food for a few dollars, including a meal at a Michelin-starred stall for four Euros, the Singapore government is intervening with the goal of preserving food stalls. The Economist reports on it and you get hungry right away.

Vlagging is boring, so keep it simple

Useful not only for companies with commissioners, but even for associations or charities, this proven framework for communicating effectively with investors and stakeholders, created by seasoned professionals.It's eight, or if you're looking for money nine, chapters that you can fill in periodically and makes good reporting easy. The nice thing is that it gives not only a numerical, but also a substantive picture of activities and progress. You can make a copy here.

Fifty presentations that raised billions

A gold mine of successful pitch decks, useful if you are seeking capital or want to hone your presentation skills. Note how little text American presentations contain compared to European ones, which too often end in sweaty executives with their backs to the audience reading their own slides word for word. After all these years, Airbnb' s pitch deck continues to excel in simplicity.

The 'First Hour Rule'

Avoid your phone in the first hour of the day. Jeff Bezos swears by it, and research indicates positive effects for creativity and focus. Now I rarely think: "That Jeff Bezos seems like a happy and fun person, let's see what I can copy from him.But effective he certainly is, so this article explaining why you shouldn't touch your phone until an hour after getting up is fascinating. (Of course, I don't adhere to it. For the first hour, by the way, besides phone scrolling, I do a hundred push-ups and nibble on quinoa.)

Live long without getting scary

The latest trend in geek country is focusing on longevity, or longevity. One example was recently the successful happening in San Francisco with the catchy name The Don't Die Summit, held just after the Brain Wave Rave. The San Francisco Standard reports on trends such as delayed-release caffeine pills, which you take before bed and which help you wake up faster in the morning. And the term Big Data takes on a whole new meaning in this excellent article on the combination of data and a better sex life, again from the Economist.

Work creatively yet quickly

Whether you are a musician, filmmaker or manager, often your work consists of starting with a blank sheet and searching for inspiration. How do you systematically produce quality, without losing creativity? This video offers an intriguing view of the structured way Prince made music, proof that creativity and discipline can go hand in hand.

The originally Dutch-Indonesian rock band Van Halen recorded the first album in three weeks and the second even in ten days, a fine example of pure spontaneous creativity. They talk about it in Dutch, in this clip from the late 1970s.

A chimp, a robot and a boy from Liverpool

Speaking of creativity, when you hear that a feature film is being made about the life of Robbie Williams in which the lead actor is portrayed as an animated chimpanzee, you don't immediately think of an Oscar for best screenplay. Yet it seems to be a phenomenal film, not only according to British media. Even the trailer is extraordinary. Unfortunately, I have not yet been able to see Better Man. By the way, did you know that Williams comes from the Jordaan? 

In fact, the film I've enjoyed the most lately is my favorite animated film of recent years: The Wild Robot. That title is not catchy, the robot does not look lovely like the cute little robots in Star Wars, and the beginning where a household robot washes up on a desert island is slow. Unexpectedly, The Wild Robot turns out to be an ode to zest for life, caring and forgiveness. Highly recommended, it even scores 97% on Rotten Tomatoes.

Finally, this Sunday, a heartwarming video of little Isaac from Liverpool being surprised at school by the two soccer players whose puppets he puts on the table every day in class: Virgil van Dijk and Mohamed Salah.

Next week the first regular newsletter of the year focusing on technology news, innovations and tech investments, see you then!

Categories
AI invest crypto

Forget FANG, it's all about BATMMAAN now - or is it crypto after all?

Once upon a time, the acronym FANG (for Facebook, Apple, Netflix and Google) was the symbol for tech stocks. But almost unnoticed, Broadcom snuck into the club of trillion-dollar companies, and now there is a new acronym: BATMMAAN (Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, Nvidia). Barron's came out with an excellent analysis including a price comparison. What does it show? Nvidia is the cheapest stock of the bunch.

BATMMAAN stock performance in the last year: up 66% on average.

Forget FANG, here's BATMMAAN

This is especially noteworthy since Nvidia was already by far the best-performing stock among the tech giants over the last year. Propelled by the AI hype, Broadcom (symbol AVGO) is also coming on strong, while Tesla is mostly driven by members of Elon Musk's cult.

The entire BATMMAAN club made an average return of 66% last year. In fact, Apple and especially Microsoft are doing substantially worse than the S&P 500, which has proven to be a solid investment at 25%. Both icons are suffering from the AI hype: Apple because it derives no identifiable revenue or profit benefit from AI and Microsoft because it is making tens of billions in additional investments in AI, the long-term returns of which investors doubt.

Return of top cryptocurrencies: 174%

Investors with a strong stomach have had a wonderful year in the crypto world, where the average rise of the largest crypto currencies measured by market cap, has been a whopping 174%.

The most frequently asked question in crypto remains: which coin should I buy? But the largest crypto currencies were already doing 174% year-to-date.

In addition to the rise of memecoin Dogecoin, carried in part by Doge fan Elon Musk, it is particularly notable that XRP, a Stone Age token by crypto standards, rose over 450%. Trump's upcoming presidency ensures that a new SEC boss will be appointed, following notorious cryptohater Gensler. The hope of XRP holders is that under the new administration, the SEC will end the ongoing legal proceedings against XRP.
 

Categories
technology

Gamble: TikTok only goes black temporarily in the U.S.

 Mark Zuckerberg's dream comes true: his major competitor TikTok no longer works in the U.S.

The new year has barely begun and, especially on social media, there is already a lot going on. Mark Zuckerberg declared in a video dressed as some kind of pimped-up Joardy that racists and other goofballs are allowed to go wild on his Facebook and Instagram as usual. Of course, this is to please the MAGA universe, because anything goes to sell ads in the world of Zuckerberg and his famous rubber backbone.

TikTok no longer works in the U.S.

In the US today, TikTok is no longer operating, although Trump has signaled tomorrow on his first day in office that he will give the popular app 90 days to comply and sell TikTok's US operations.

From the fact that the CEO of TikTok was invited to Trump's inauguration, it can be inferred that a permanent ban on TikTok in the U.S. will not be too bad. It is more likely that Trump will force parent company ByteDance to sell TikTok, for example to his new hypeboy Elon Musk. It is highly questionable whether Trump will actually start a trade war with China, the country that is a crucial market for American giants such as Tesla from friend Musk, as well as Apple, Intel and Boeing.