Could This be How a Disruptor Recovers Their Investment AND Still Gives Services Away?

The recent release of DeepSeek and subsequent bombing of NVIDIA and other tech stocks sparked the following:

Imagine you own a Hedge Fund dedicated to giving high returns and have many investors looking to score by shorting stocks. Shorting stocks happens when you believe that a stock or market will decline. Obviously if you KNOW that a stock will decline then you are way ahead of the game.

So you begin to dabble in AI – looking to build a product that will be all things to all investors – the gamblers, the builders, the income seekers.

Along the way you discover that you can actually build an AI model cheaper and as impactful as all the other AI models.

Then you realise that your AI model has the potential to blow all other high tech stocks out of the water once released.

So, do you do the honourable thing and play nice OR do you short as many tech stocks as possible BEFORE your release date?

Personally I know that I would really struggle with that quandary but would settle on investing in my own product and banking on the long term gains.

Following the release of DeepSeek on 20 January 2025, the impact on technology stocks was quite significant:

Market Value Loss: Approximately $600 billion was wiped off the market value of major tech companies, particularly affecting Nvidia.
Stock Price Drop: Nvidia’s share price dropped by roughly 17% in the days following the announcement*.
Broader Impact: The selloff was part of a larger trend, with tech billionaires collectively losing nearly $100 billion in the stock market.

* NVDA Share Price:

21 January – $140.83
22 January – $147.07
23 January – $147.22
24 January – %142.62
27 January – $118.42
28 January – $128.99
29 January – $123.70
30 January – $124.65
31 January – $120.07

DeepSeek Artificial Intelligence Co., Ltd., founded in 2023, is a Chinese company dedicated to making AGI a reality.

DeepSeek is a owned by High-Flyer – a Chinese hedge fund company incorporated in February 2016. Its legal registration address is in Ningbo, Zhejiang, and its main office location is in Hangzhou, Zhejiang. It is the founder and backer of AI firm DeepSeek.

A hedge fund is an investment vehicle that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex strategies. Hedge funds aim to generate high returns, often by leveraging advanced investment strategies, including long/short equity, market neutral, arbitrage, and macroeconomic trends.

Estimates of how much is cost to build DeepSeek range from $5 to $500 Million and are compared to other competing models that are estimated to have cost hundreds of millions of US Dollars if not billions of US Dollars.

Due to U.S. export restrictions on China, the DeepSeek team did not have access to high performance GPUs like the Nvidia H100. Instead they used Nvidia H800 GPUs, which Nvidia designed to be lower performance so that they comply with U.S. export restrictions.