Don’t let the AI phoney war obscure the real battle for cash
The earth didn’t shake, but the stock market certainly wobbled. This week we learned something interesting about artificial intelligence (AI) following the release of version three of DeepSeek, a large language model (LLM) AI developed in China.
We thought, for instance, that AI requires the fastest semiconductors and virtually unlimited investment. Now we know that this is not true. While DeepSeek was trained on Nvidia H800 GPUs, due to a US export ban on high-end silicon it runs on Huawei 910C chip.
In other words, DeepSeek was cobbled together in the face of attempts to hold Chinese tech firms back and yet it beats OpenAI’s GPT-4o and Meta’s Llama on some benchmarks. Markets reacted immediately, with Nvidia falling almost 30%. Nvidia is still an incredibly highly-priced stock, of course, so this is hardly the end of the world.
However, the hole punched in the AI narrative is interesting.
Since the launch of ChatGPT in November 2022 we have been told, over and over, that AI is going to change everything, that it is inevitable, and that its processing power (and therefore energy) needs must be met, and its gaping maw stuffed with all the ‘data’ humanity has ever produced.
That last point in particular makes the claim that DeepSeek is built on the theft of other AI companies’ intellectual property ironic, to say the least. The question of energy, meanwhile, has caused major tech firms to quietly drop plans, once shouted from the rooftops, to achieve so-called ‘net zero’ carbon emissions.
Incalculable sums have been invested in AI. Goldman Sach says that $1 trillion will be spent to support AI in the coming years, but capital expenditure is only a part of the picture. Investment flows into shares in any company that can plausibly be linked to AI have been enormous, and we have also seen deals where companies like Apple and Microsoft poured cash into privately-held outfits like OpenAI.
To say that, in the end, this is all about money is to state the obvious. In fact, it is so self-evident that it is almost comical. But from grifters on X (formerly Twitter) shifting their ropey newsletters from cryptocurrency to AI (truly the bottom-feeders in the AI cash grab), through to the integration of unwanted AI tools in almost every piece of software imaginable, to bonkers plans to “mainline” AI into the basic operations of states, there is the clear expectation of a happy payday.
Indeed, the nexus of AI and the state is particularly interesting in this regard. Despite its techno-libertarian blabbering, tech firms have never been opposed to a bit of rent-seeking. From protectionist tariffs to just flogging stuff to the state, the all too visible hand is reaching for the pocket. There could be no clearer indication of the gravy train than the launching of a AI product specifically aimed at use by the US government.
Whether you think the rise of AI is exciting or terrifying, what it is, more than anything, is business as usual.
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