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AI, Deepseek And Getting Used To More Jurassic Park Stock Market Moments…So Much Alpha Is Up For Grabs

Good morning…

Long story short today…

As hardware and software mix in an AI world that has the ‘walls’ and ‘constraints’ both internally and externally by both the US and Chinese government…there will be more Jurassic Park moments that shake the markets.

AND..

If you believe everything is priced in…there is indexing. It is a wonderful way to invest. But, In 2025, surprisingly very little is priced in because for so many market participants that trade/invest based on price only and so many and memecoins/stocks that have zero utility and fundamentals.

Unlike what my young pal Trung Phan and this Redditor thinks to be true (because the textbooks and Warren Buffet and and and) , the ‘degenerate economy’ believes/acts different.

This old ‘meme’ stock market cartoon holds true more than ever as $1 trillion came and went rather quickly in Nvidia:

On Sunday, I knew the market was going to get Deepseeked. Because it was the first I was hearing of Deepseek and I thought it came out of nowhere (also why I mostly index and trade very little).

It did not!

I assumed we would be inundated with media pile ons and volatility in AI related stocks.

We did.

Will it continue?

Like a natural disaster, yes!

Deepseek did not come out of nowhere.

As my friend and ‘Trends With Friends’ cohost Michael Parekh wrote yesterday:

Before DeepSeek became famous outside China in the last few weeks, it’s been famous for at least a year in China for its aggressive pricing vs other LLM AI companies. China’s AI market is hyper competitive, with large player like Alibaba, Baidu and others. And DeepSeek has managed to more than hold its own with its low cost pricing, driven by their product innovations, to lower their prices aggressively in China for end users.

This comes through in the founder’s philosophy on pricing:

“After DeepSeek V2’s release, it quickly triggered a fierce price war in the large-model market. Some say you’ve become the industry’s catfish.”

“Liang Wenfeng: We didn’t mean to become a catfish — we just accidentally became a catfish. [Translator’s note: This is likely a reference to Wong Kar-wai’s new tv show 王家卫 “Blossoms Shanghai” 繁花, where catfish are symbolic of market disruptors due to their cannibalistic nature.]”

“Waves: Was this outcome a surprise to you?”

“Liang Wenfeng: Very surprising. We didn’t expect pricing to be so sensitive to everyone. We were just doing things at our own pace and then accounted for and set the price. Our principle is that we don’t subsidize nor make exorbitant profits. This price point gives us just a small profit margin above costs.”

Low pricing to create Flywheels is not new. Amazon, inspired by Costco did that to reach Internet greatness.

Ted Merz did a little digging like Michael noted…found the same. The news was long out. Ted walks you quickly through it.

The markets and the rules are changing as technology mixes with government constraints and borders (physical and digital) and as a whole new digital financial market explodes with liquid and illiquid digital money and assets.

So much Alpha is up for grabs.

Don’t blame or hate the ‘degenerates’ or the ‘degenerate economy’!





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