🤯 DeepSeek beat the rival bots

What’s going on here?

Chinese AI startup DeepSeek stormed past America’s best to reach the top of Apple’s App Store, prompting a tech stock selloff – not bad for a lab that’s barely one year old.

What does this mean?

America’s chip export ban was designed to keep the smartest semiconductors out of Chinese factories – a strategy the US hoped would protect its lead in the AI race. But it looks like the country will need to do more than throw proverbial banana peels onto the track. Despite being stuck with second-string chips, DeepSeek has still managed to make a large language model that can compete with US ones – and for a fraction of the price. The lab spent just $5.6 million training that “V3” model – chump change compared to the $1 billion tab some US equivalents rack up. Plus, DeepSeek has an advanced reasoning “R1” version too, which it says can rival OpenAI’s best.

Why should I care?

For markets: The price is right.

Come February, other firms will be able to use DeepSeek’s V3 to build their own AI services – at less than a tenth of the cost of using US-based Anthropic’s Claude. That, at a time when more and more businesses are welcoming the tech: the number of Chinese companies using AI now tops 10%, up from just 8% six months ago. And with DeepSeek offering cutting-edge tools at a sale-season price, even the most popular AI service providers may need to offer cheaper plans if they want to keep their customers.

The bigger picture: The bigger they are, the harder they fall.

DeepSeek’s bootstrapped strategy and open-source approach are lowering the drawbridge for smaller players, threatening Big Tech’s monopoly. And other emerging nations like India may find it easier to align with China’s tech ecosystems. Investors already seem less sure of their bets: global tech stocks were sent south on Monday.

What’s going on here?

Data out on Monday showed that China’s factories moved at their slowest pace since last August this month, and it’ll take more than fuzzy socks to shake off that winter lethargy.

What does this mean?

China’s manufacturing purchasing managers’ index (PMI) acts as the economy’s first official health check each month. And this time, it looks like it needs the financial equivalent of a vitamin drop – stat. The reading of 49.1 indicated that factory activity was in decline after three months of much-needed growth. Now, the government did manage to temporarily perk the economy up a little at the end of last year. But with deflation, potential tariffs, and sliding company profits to tackle, it’ll take more than those half-hearted measures to bring about any sustained momentum.

Why should I care?

For markets: So much for hot commodities.

Factories across the country might be noticing the odd tumbleweed, but it’s China’s commodity producers bearing the brunt of the slowdown. Oil refiners racked up eye-watering losses to land at the – ahem – bottom of the barrel last year, while steelmakers and coal miners both saw profit dwindle. It doesn’t look like these industrial giants will catch a break anytime soon, either. Prices are falling across the board and the supply of commodities is overshadowing demand, while green energy policies are threatening their staying power in the long term.

The bigger picture: Investors are playing favorites.

Investors haven’t ditched China yet, though they are becoming more selective. Hefty state-owned, dividend-paying companies have been a crowd favorite lately, along with budget-friendly brands and ecommerce platforms – the latter being due to a shift in money-conscious shoppers’ spending habits. And let’s not forget about tech firms. Ones that are less vulnerable to US tariffs have been the most popular, as well as those tied to China’s push to become self-reliant.