One of President Donald Trump‘s top supporters in Silicon Valley, the venture capitalist and former Liberal Marc Andreessen, has seen the future of Artificial Intelligence. And it looks Chinese.
The U.S. stock market has seen it too, and concurs with Andreesen’s opinion that the new AI product from China called DeepSeek is an “amazing breakthrough.”
Andreessen also characterizes DeepSeek as AI’s “Sputnik moment” — referencing the Russian satellite whose 1957 launch sparked the space race and increased tensions between the Soviet Union and the United States.
Deepseek R1 is AI’s Sputnik moment.
— Marc Andreessen
(@pmarca) January 26, 2025
DeepSeek’s surprise emergence grounded a soaring stock market that has been largely driven by AI speculation. U.S. stocks are currently falling for the first time since Trump took office, as the darling of the market’s precipitous rise –Nvidia, the U.S. chipmaker at the forefront of American Artificial Intelligence advancements — is looking like so many 17th century Dutch tulips.
[Headlines abound reading “The DeepSeek watershed moment: Why an open-source AI model from China is reshaping the global tech scene” and “The rise of DeepSeek: 20 times cheaper with the same results.”]
That “20 times cheaper” claim is because China’s DeepSeek doesn’t rely — as OpenAI and other American code does — on the kind of complex chips that are Nvidia’s specialty.
Bloomberg quotes a managing director at Union Bancaire Privee who asserts that DeepSeek “can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers.”
Trust is critical.
https://t.co/4U44h9N1xx
— Marc Andreessen
Even more problematic, perhaps, from the perspective of American AI investors is the open source aspect of DeepSeek, which undercuts the licensing revenue models of OpenAI, Meta and other U.S. AI juggernauts.
Trump, who campaigned promising a hard line against China, especially on the technology front — and who had top American tech chiefs arrayed around him for his inauguration — now must confront a China that may have won this tech battle not with brute financial force and intellectual property theft, but with homegrown innovation, the very thing Silicon Valley has for decades claimed supremacy in.
“One of the most amazing and impressive breakthroughs I’ve ever seen,” venture capitalist Marc Andreessen of China’s seminal moment.