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Posted On: 02/14/2025 4:36:30 PM
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DeepSeek’s Emergence Raises Questions About AI and the Direction of ESG
DeepSeek recently rolled out its large language model designed to improve reasoning capability using less computing power and fewer chips dubbed R1. In its announcement, the Chinese company revealed that it had used about $6 million to develop its model. This amount, while still huge, is minute in comparison to the multi-billion-dollar costs of other AI models.
Following the announcement, AI stocks and firms associated with the space saw massive drops. For instance, Nvidia lost nearly $600 billion in market capitalization as investor concerns that demand for the firm’s chips would reduce soared. Additionally, analysts observed a 20-30% decrease in various energy stocks, a surprising shift as some power producers were major winners last year.
This massive sell-off, the analysts argued, may have been driven by the challenging of market assumptions about how artificial intelligence would develop and who’d be at the forefront.
The announcement came just days after President Trump announced the Stargate project, a $500-billion joint venture by Oracle, SoftBank and OpenAI, focused on building artificial intelligence infrastructure in America.
GRC International’s Camden Woollven, claims that DeepSeek’s announcement showed smaller developers and firms that they could also enter the industry, which could put an end to the market’s domination by a handful of firms. Currently, Nvidia, Alphabet, Apple, Amazon, Microsoft, Tesla, and Meta make up about 60% of this market.
Observers believe the Chinese company’s launch is a good reminder of why investors and firms need to consider ESG risks and other factors in their investment strategies. Prof. Tom Vazdar at Open Institute of Technology explains that overvaluations by tech firms heighten market volatility and expose the wider economy to risks while also heightening vulnerability to external shocks.
Morningstar’s head of sustainable investing research Hortense Bioy agrees with this, noting that the huge value chains of these companies puts investors at a disadvantage in the event of sell-offs. Bioy adds that to reduce this impact, it is important for investors to understand these value chains better and diversify their portfolios.
Furthermore, she called to attention the importance of the Corporate Sustainability Due Diligence Directive, which requires firms to recognize risks in their supply chains.
Vazdar believes that DeepSeek’s launch may have been a strategic move from China, demonstrating that the country was able to develop high-performance artificial intelligence even with the current constraints. These include the heavy tariffs America recently imposed on China and stringent export controls. It remains to be seen though whether China’s innovation will dominate the market or not.
It is likely that entities like Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) will analyze what is happening in the AI ecosystem and pick some ESG lessons for implementation in their operations and plans.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
DeepSeek recently rolled out its large language model designed to improve reasoning capability using less computing power and fewer chips dubbed R1. In its announcement, the Chinese company revealed that it had used about $6 million to develop its model. This amount, while still huge, is minute in comparison to the multi-billion-dollar costs of other AI models.
Following the announcement, AI stocks and firms associated with the space saw massive drops. For instance, Nvidia lost nearly $600 billion in market capitalization as investor concerns that demand for the firm’s chips would reduce soared. Additionally, analysts observed a 20-30% decrease in various energy stocks, a surprising shift as some power producers were major winners last year.
This massive sell-off, the analysts argued, may have been driven by the challenging of market assumptions about how artificial intelligence would develop and who’d be at the forefront.
The announcement came just days after President Trump announced the Stargate project, a $500-billion joint venture by Oracle, SoftBank and OpenAI, focused on building artificial intelligence infrastructure in America.
GRC International’s Camden Woollven, claims that DeepSeek’s announcement showed smaller developers and firms that they could also enter the industry, which could put an end to the market’s domination by a handful of firms. Currently, Nvidia, Alphabet, Apple, Amazon, Microsoft, Tesla, and Meta make up about 60% of this market.
Observers believe the Chinese company’s launch is a good reminder of why investors and firms need to consider ESG risks and other factors in their investment strategies. Prof. Tom Vazdar at Open Institute of Technology explains that overvaluations by tech firms heighten market volatility and expose the wider economy to risks while also heightening vulnerability to external shocks.
Morningstar’s head of sustainable investing research Hortense Bioy agrees with this, noting that the huge value chains of these companies puts investors at a disadvantage in the event of sell-offs. Bioy adds that to reduce this impact, it is important for investors to understand these value chains better and diversify their portfolios.
Furthermore, she called to attention the importance of the Corporate Sustainability Due Diligence Directive, which requires firms to recognize risks in their supply chains.
Vazdar believes that DeepSeek’s launch may have been a strategic move from China, demonstrating that the country was able to develop high-performance artificial intelligence even with the current constraints. These include the heavy tariffs America recently imposed on China and stringent export controls. It remains to be seen though whether China’s innovation will dominate the market or not.
It is likely that entities like Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) will analyze what is happening in the AI ecosystem and pick some ESG lessons for implementation in their operations and plans.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
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