The Evolution of Artificial Intelligence (AI)- The impact of China’s DeepSeek AI announcement
The Chinese announced the availability of their entry into the AI race, DeepSeek, purportedly, on par with the leading US offerings from OpenAI, Anthropic, and others. The real breakthrough here is that, according to the Chinese, this AI software can run on substantially less powerful hardware at a dramatic lower cost than the competitors. Much is unknown about the veracity of such statements, but we can draw some conclusions:
The enormous capital requirements of the first generation of AI software has been breached- broadening the market opportunity
Lower cost hardware will broaden and speed up market development for AI
Today’s industry leader- Nvidia will lose some pricing power
The leadership mantle will pass from hardware to software
2025 will be the year of application software incorporating AI features, notably agents
The pace of development will accelerate owing to competition among the leaders looking for something defensible other than just access to capital
Next developments in AI software are likely around Inference, the ability of the software to learn from previous unseen data and patterns approaching more human-intelligence
Inference will allow applications for autonomous driving, improved robotics, and others
Those that had no discernible AI strategy in round one, now have an opportunity to incorporate new developments at lower capital costs- Apple come to mind
The leadership mantle will be passed around, reminiscent of the early days of search engines
This is the starting line; the race is only just beginning……..
Bruce