February AI Reality Check: DeepSeek and AI Progress

In late January, a Chinese AI model, published by DeepSeek, caused a very significant sell off of AI related stocks. It had this effect because it was rumored to have been created without the highest end Nvidia chips (because of export controls to China), and with significantly lower training costs - at first it was rumored to be under $10MM, vs. $100MM+ for similar American models. The fear was that our need for all this investment in AI was unnecessary.

After a couple of weeks, we now know a few things:

The Good: AI progress will continue, and more products will likely be released more often, and as open source. We see this already with OpenAI’s rapid release of Deep Research, Operator and decision to pull forward GPT 4.5, and GPT 5, neither of which had even a vague timeline before DeepSeek. For SMACNA members, this will mean more useful, high powered tools are available sooner.

The Bad: A powerful, free model like this is likely to drive adoption, which in turn might create disruption down the road if/when the US government chooses to follow a TikTok ban with a DeepSeek ban. For SMACNA members, the implication is to avoid adopting DeepSeek-powered applications, at least in the near term.