00:00I think the first thing to say about this, you know, is that this is a real victory for China.
00:04Well done them, because they, if this is true, if this all pans out for deep-sea,
00:09then they've gone and created this chat GPT equivalent and these cheaper chips in the face of very, very
00:15severe restrictions from the Biden administration over the last four years. And being frank about it,
00:20it's a difficulty of getting hold of some of the commodities that you need to make these microchips. Water, for example, is scarce in parts
00:27of China, and you need water to make these microchips. But I will tell you from Wall Street's perspective,
00:31it brings into very, very sharp relief the
00:35sort of concern that Wall Street has about investing in these Chinese ADRs that trade here.
00:40These are Chinese companies that trade in America under the tag ADR, American Depository Receipt.
00:45So Wall Street is nervous about investing in them, and just this kind of thing is why.
00:50Because on Friday, nobody here had ever heard of deep-sea, okay?
00:54Now, I want to be absolutely clear with you. That is partially true, all right?
00:58I hadn't heard of them. Most of the people on the floor hadn't heard of the company.
01:02There are specialist journalists who do nothing but this kind of stuff all the time who do know about them.
01:06And of course, I think Meta Platforms has had some sort of relationship.
01:10But basically, they've gone in the space of two days from being a company
01:14no one in the West had ever heard of, to dominating the international headlines and bringing down the global markets.
01:20Now, deep-sea is a startup.
01:22It's based in Shenzhen, in Hangzhou, and the buzz began over the weekend.
01:26And the buzz is that if they have really done this, really produced this equivalent to Chad GPT
01:32using much, much, much cheaper AI chips,
01:36then we have to re-evaluate the high value of all the companies here like NVIDIA and Broadcom,
01:43which have been going up in value in the last couple of years based on their AI development.
01:47And NVIDIA, you must remember, their chips cost somewhere between $10,000 and $40,000 per chip.
01:53And you're going to need thousands of these things if you're going to have a data center.
01:56Well, apparently, deep-sea can do it much, much cheaper.
01:59So we will see. But that's forced this huge big tech sell-off over here.
02:03It calls into question the value of the Magnificent 7, of course.
02:07And all of this, just as the Magnificent 7 have begun announcing massive what we call CAPEX spending into AI projects.
02:16Now, they did a lot in 2024. They're promising to do even more, or they were in 2025.
02:22So it's a challenge to Microsoft and Meta and all of that.
02:25However, however, as always, there's a caveat and questions to be raised.
02:30Number one question is this is the only data point we've got.
02:34All we have is deep-seas word and we can't look into their books.
02:38We can't see behind the deep-sea curtains.
02:41So that's a problem.
02:43Also, the question is, will anyone actually buy the deep-sea product?
02:48Will they go for it? They may not.
02:49Also, how is it actually going to be used and how accurate is it?
02:54My understanding is it's very, very similar to chat GPT.
02:58And you can switch between the two if you want to very, very super easily.
03:01But how accurate is it?
03:02That's going to be the thing that people will be most interested in.
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