Business
DeepSeek Prompts a Reckoning Across Wall Street and Silicon Valley
Good morning on this action-packed Monday. Mark this week on your “History of Artificial Intelligence Timeline”: The creation of DeepSeek, the Chinese A.I. sensation that we told you about last week, is shaking the technology industry to its core.
The super-efficient, open-source software is raising questions about the valuations of tech giants, including the chip maker Nvidia, with their stocks getting crushed today. Has the entire industry been wildly overspending? It’s also raising profound questions about how China may have undercut America’s most critical economic advantage on A.I. by making its technology free. We have more on all of this below.
Plus: Wall Street should pay attention to comments President Trump made late Friday that have flown under the radar.
The DeepSeek effect
Markets are on edge on Monday, as global tech investors face a $1 trillion wipeout. The cause: anxiety that the emergence of powerful — and cheap — Chinese artificial intelligence software could upend the economics of A.I.
Nasdaq futures have plummeted nearly 4 percent. And shares in Nvidia, the chipmaker whose processors help train and run A.I. software, are down 11 percent in premarket trading. Those in Constellation Energy, a utility betting heavily on powering A.I. data centers, are down nearly 13 percent.
Meanwhile, tech executives and policymakers have been left to wonder how strong America’s lead in A.I. is.
DeepSeek is forcing a reckoning in Silicon Valley. The company’s models appear to rival those from OpenAI, Google and Meta, despite the U.S. government’s efforts to limit China’s access to leading-edge A.I. technology. And DeepSeek says it did all this with a fraction of the resources that American competitors use.
Over the weekend, DeepSeek shot to the top of Apple’s App Store charts, rivaling ChatGPT. And DeepSeek is drastically undercutting OpenAI on price.
That raises a number of questions:
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Do leading A.I. companies like Google, Meta and the privately held OpenAI and Anthropic deserve their astronomical valuations?
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Do companies need to spend hundreds of billions on vast data centers powered by hugely expensive chips from Nvidia and others? Consider that OpenAI and its partners have promised to spend at least $100 billion on their Stargate project, or that Microsoft said it will spend $80 billion, or Meta $65 billion.
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Does America need the huge uptick in electricity generation that has fueled a run-up in utility stocks?
American tech companies are scrambling to respond. The Information reports that Meta has tasked several teams of engineers with closely examining DeepSeek to see how they can improve their company’s own Llama A.I. software.
Already, American A.I. providers are rushing to dissuade customers from switching to cheaper DeepSeek offerings. (One potential stumbling block for some is that DeepSeek, as a Chinese company, won’t answer questions on sensitive topics such as those involving China’s leader, Xi Jinping, though developers say that it’s easy to modify the software.)
Satya Nadella, Microsoft’s C.E.O., has a more positive take: More efficient and accessible A.I. might lead to a “Jevon’s paradox” moment: “As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of,” he wrote on X.
What will policymakers do? President Trump and other Western leaders have been anxious to unveil steps to bolster their homegrown A.I. industries, both by helping them grow and imposing constraints on Chinese rivals. But DeepSeek suggests there are limits to that approach.
Expect tough questions from analysts this week, especially as four of the so-called Magnificent Seven tech giants, including Meta and Microsoft, report earnings this week.
HERE’S WHAT’S HAPPENING
Hearings for Trump cabinet picks and the Fed loom large this week. Senators are expected on Monday to approve Scott Bessent as Treasury secretary. On Wednesday, they will hold confirmation hearings for Howard Lutnick, President Trump’s choice for commerce secretary, and Robert F. Kennedy Jr., the candidate for health secretary. Also on Wednesday, it’s decision day for the Fed: Many on Wall Street expect the central bank, wary of inflation, will keep interest rates steady.
Bitcoin falls below $100,000 as the industry deals with a flood of memecoins. The sell-off coincides with the broad slump in tech stocks, and comes despite an executive order by Trump to bolster the sector. (Tokens tied to the president and the first lady, Melania Trump, have slumped sharply again, amid a wave of criticism.) Meanwhile, Brian Armstrong, the C.E.O. of Coinbase, who criticized regulations by the Biden administration, suggested that regulators should create a “block list” for new digital tokens as his company struggles to deal with the million new ones being created each week.
Trump says he’s making progress on a TikTok sale. The president said he was in talks with several potential buyers to take control of the video app as part of an arrangement with ByteDance, the platform’s Chinese owner, with a potential decision in the next 30 days.
Trump continues his attack on banks
President Trump’s jab at Brian Moynihan, Bank of America’s C.E.O., grabbed headlines at the World Economic Forum in Davos, Switzerland, when he accused the executive of “debanking” his conservative supporters.
What many haven’t noticed that Trump has kept up his attack since then.
When the president visited Los Angeles on Friday for a round table on the California wildfires, he doubled down on his criticism of Bank of America. “They’re not nice. Sounds very nice, ‘The Bank of America.’ They are not nice,” he told someone in attendance. But he didn’t stop there, adding, “We’re doing numbers on banks.”
Trump’s issues have expanded beyond debanking. The conversation in Los Angeles was about the profit margin that banks often capture by charging a significantly higher interest rate on loans to consumers than the banks pay to borrow from the Fed.
Might he try to force banks to lower interest rates? Or could he make good on a campaign promise of capping credit card interest rates? (It’s not clear if he has the authority to do so via executive order.)
Trump’s relationship with banks is complicated. Few on Wall Street and finance are in Trump’s inner circle, especially compared with tech moguls (some of whom are trying to disrupt banking). Howard Lutnick, Trump’s pick for commerce secretary, comes from the rough-and-tumble brokerage business than the polished worlds of investment banking and commercial lending.
By contrast, Jamie Dimon of JPMorgan Chase has a more nuanced relationship with the president. Though he privately supported Kamala Harris in the 2024 election, the JPMorgan chief has said that Trump wasn’t wrong on issues including taxes and immigration at last year’s Davos, and this year said he’d be on board with tariffs if they’re good for national security.
Also worth noting: One of Bank of America’s largest shareholders is Warren Buffett, who has clashed with Trump in the past. That said, Buffett didn’t weigh in on the election and has been selling down his Bank of America stake since before November.
Trump is taking shots at banks just as they were expecting a friendlier administration., The industry, whose members had been prevented from merging for years, was expecting a wave of consolidation under Trump.
But there have already been signs that banking won’t get what it wants. Trump’s pick for Treasury secretary, Scott Bessent, said in his confirmation hearing this month that the five largest banks had too much market share.
What to read into Trump’s Colombia showdown
President Trump’s standoff with Colombia over immigration lasted just a few hours and played out mostly on social media.
But the fallout will likely reverberate among global leaders.
The latest: President Gustavo Petro of Colombia backed down from his refusal to accept American military planes carrying deportees into the South American country. His decision came after Trump threatened sanctions and tariffs — starting at 25 percent, and then climbing — on the country’s exports, including crude oil, coffee and cut flowers.
Petro’s U-turn gives the White House a victory on multiple fronts. Trump can show he’s living up to his campaign promise to crack down on illegal immigration.
And he can put other foreign capitals on notice that he will use tariffs to extract conditions that go beyond trade. “Today’s events make clear to the world that America is respected again,” the White House declared in a statement.
Allies won’t be spared. Colombia has long had close diplomatic ties to the United States — as do other targets of potential tariffs, Canada and Mexico. Some Trump aides want to proceed with tariffs on the latter on Feb. 1, talks or no talks, The Wall Street Journal reports.
Last week, the S&P 500 rallied in part on hopes that Trump’s recent tariff comments, especially about China, signaled a softer policy approach. Was that all a mirage?
And then there’s Greenland. Trump has coveted the autonomous Danish island for its strategic location in Arctic shipping and defense and for its mineral wealth, and has suggested he’d be willing to use military force or economic coercion to annex it.
On Air Force One this weekend, Trump told reporters that he could wrest control of Greenland from Denmark. “I think we’re going to have it. I think the people want to be with us,” he said, referring to Greenlanders.
Trump’s comments add to heightened tensions between Washington and NATO allies. “The Danes are saying, ‘Keep it down,’ but they’re scared,” Zaki Laïdi, an adviser to the former E.U. foreign policy chief Josep Borrell Fontelles, told The Times.
Douglas Emhoff’s next gig
The latest guessing game on the Washington-to-New York Acela is where former Vice President Kamala Harris and her husband, Douglas Emhoff, might go next. We know the answer to half of that question.
Emhoff will become a partner at the corporate law firm Willkie Farr & Gallagher, splitting his time between Los Angeles and Manhattan. He starts on Monday, advising companies on crises including litigation and corporate investigations, DealBook’s Lauren Hirsch is first to report.
Emhoff spent decades as a corporate lawyer before moving to Washington. He co-founded a boutique law firm in 2000, which he sold to a rival, Venable, in 2006. He left Venable in 2017 for DLA Piper, and stepped away full-time in 2020, partly to avoid conflicts of interest entanglements once his wife became vice president.
His clients have included Spotify and Lionsgate. He’s also represented Willie Gault, the former Olympic sprinter and N.F.L. star, whom he represented in an S.E.C. fraud case.
Willkie will tap Emhoff’s experience from his legal career and the White House. The second gentleman has amassed a network of key figures in entertainment, private equity and the corporate world.
Emhoff was a visible presence during the presidential campaign, helping his wife raise more than $1 billion. He also represented the U.S. in a diplomatic capacity at events like the 2024 Olympics in Paris, and led the Biden administration’s efforts to combat antisemitism.
“That got him in touch with very important leaders across the globe,” Thomas Cerabino, a co-chairman at Willkie, told DealBook.
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Business
Podcast industry is divided as AI bots flood the airways with thousands of programs
Chatty bots are sharing their hot takes through hundreds of thousands of AI-generated podcasts. And the invasion has just begun.
Though their banter can be a bit banal, the AI podcasters’ confidence and research are now arguably better than most people’s.
“We’ve just begun to cross the threshold of voice AI being pretty much indistinguishable from human,” said Alan Cowen, chief executive of Hume AI, a startup specializing in voice technology. “We’re seeing creators use it in all kinds of ways.”
AI can make podcasts sound better and cost less, industry insiders say, but the growing swarm of new competitors entering an already crowded market is disrupting the industry.
Some podcasters are pushing back, requesting restrictions. Others are already cloning their voices and handing over their podcasts to AI bots.
Popular podcast host Steven Bartlett has used an AI clone to launch a new kind of content aimed at the 13 million followers of his podcast “Diary of a CEO.” On YouTube, his clone narrates “100 CEOs With Steven Bartlett,” which adds AI-generated animation to Bartlett’s cloned voice to tell the life stories of entrepreneurs such as Steve Jobs and Richard Branson.
Erica Mandy, the Redondo Beach-based host of the daily news podcast called “The Newsworthy,” let an AI voice fill in for her earlier this year after she lost her voice from laryngitis and her backup host bailed out.
She fed her script into a text-to-speech model and selected a female AI voice from ElevenLabs to speak for her.
“I still recorded the show with my very hoarse voice, but then put the AI voice over that, telling the audience from the very beginning, I’m sick,” Mandy said.
Mandy had previously used ElevenLabs for its voice isolation feature, which uses AI to remove ambient noise from interviews.
Her chatbot host elicited mixed responses from listeners. Some asked if she was OK. One fan said she should never do it again. Most weren’t sure what to think.
“A lot of people were like, ‘That was weird,’” Mandy said.
In podcasting, many listeners feel strong bonds to hosts they listen to regularly. The slow encroachment of AI voices for one-off episodes, canned ad reads, sentence replacement in postproduction or translation into multiple languages has sparked anger as well as curiosity from both creators and consumers of the content.
Augmenting or replacing host reads with AI is perceived by many as a breach of trust and as trivializing the human connection listeners have with hosts, said Megan Lazovick, vice president of Edison Research, a podcast research company.
Jason Saldanha of PRX, a podcast network that represents human creators such as Ezra Klein, said the tsunami of AI podcasts won’t attract premium ad rates.
“Adding more podcasts in a tyranny of choice environment is not great,” he said. “I’m not interested in devaluing premium.”
Still, platforms such as YouTube and Spotify have introduced features for creators to clone their voice and translate their content into multiple languages to increase reach and revenue. A new generation of voice cloning companies, many with operations in California, offers better emotion, tone, pacing and overall voice quality.
Hume AI, which is based in New York but has a big research team in California, raised $50 million last year and has tens of thousands of creators using its software to generate audiobooks, podcasts, films, voice-overs for videos and dialogue generation in video games.
“We focus our platform on being able to edit content so that you can take in postproduction an existing podcast and regenerate a sentence in the same voice, with the same prosody or emotional intonation using instant cloning,” said company CEO Cowen.
Some are using the tech to carpet-bomb the market with content.
Los Angeles podcasting studio Inception Point AI has produced its 200,000 podcast episodes, accounting for 1% of all podcasts published on the internet, according to CEO Jeanine Wright.
The podcasts are so cheap to make that they can focus on tiny topics, like local weather, small sports teams, gardening and other niche subjects.
Instead of a studio searching for a specific “hit” podcast idea, it takes just $1 to produce an episode so that they can be profitable with just 25 people listening.
“That means most of the stuff that we make, we have really an unlimited amount of experimentation and creative freedom for what we want to do,” Wright said.
One of its popular synthetic hosts is Vivian Steele, an AI celebrity gossip columnist with a sassy voice and a sharp tongue. “I am indeed AI-powered — which means I’ve got receipts older than your grandmother’s jewelry box, and a memory sharper than a stiletto heel on marble. No forgetting, no forgiving, and definitely no filter,” the AI discloses itself at the start of the podcast.
“We’ve kind of molded her more towards what the audience wants,” said Katie Brown, chief content officer at Inception Point, who helps design the personalities of the AI podcasters.
Inception Point has built a roster of more than 100 AI personalities whose characteristics, voices and likenesses are crafted for podcast audiences. Its AI hosts include Clare Delish, a cooking guidance expert, and garden enthusiast Nigel Thistledown.
The technology also makes it easy to get podcasts up quickly. Inception has found some success with flash biographies posted promptly in connection to people in the news. It uses AI software to spot a trending personality and create two episodes, complete with promo art and a trailer.
When Charlie Kirk was shot, its AI immediately created two shows called “Charlie Kirk Death” and “Charlie Kirk Manhunt” as a part of the biography series.
“We were able to create all of that content, each with different angles, pulling from different news sources, and we were able to get that content up within an hour,” Wright said.
Speed is key when it comes to breaking news, so its AI podcasts reached the top of some charts.
“Our content was coming up, really dominating the list of what people were searching for,” she said.
Across Apple and Spotify, Inception Point podcasts have now garnered 400,000 subscribers.
Business
L.A. County sues oil companies over unplugged oil wells in Inglewood
Los Angeles County is suing four oil and gas companies for allegedly failing to plug idle oil wells in the large Inglewood Oil Field near Baldwin Hills.
The lawsuit filed Wednesday in Los Angeles Superior Court charges Sentinel Peak Resources California, Freeport-McMoran Oil & Gas, Plains Resources and Chevron U.S.A. with failing to properly clean up at least 227 idle and exhausted wells in the oil field. The wells “continue to leak toxic pollutants into the air, land, and water and present unacceptable dangers to human health, safety, and the environment,” the complaint says.
The lawsuit aims to force the operators to address dangers posed by the unplugged wells. More than a million people live within five miles of the Inglewood oil field.
“We are making it clear to these oil companies that Los Angeles County is done waiting and that we remain unwavering in our commitment to protect residents from the harmful impacts of oil drilling,” said Supervisor Holly Mitchell, whose district includes the oil field, in a statement. “Plugging idle oil and gas wells — so they no longer emit toxins into communities that have been on the front lines of environmental injustice for generations — is not only the right thing to do, it’s the law.”
Sentinel is the oil field’s current operator, while Freeport-McMoran Oil & Gas, Plains Resources and Chevron U.S.A. were past operators. Energy companies often temporarily stop pumping from a well and leave it idle waiting for market conditions to improve.
In a statement, a representative for Sentinel Peak said the company is aware of the lawsuit and that the “claims are entirely without merit.”
“This suit appears to be an attempt to generate sensationalized publicity rather than adjudicate a legitimate legal matter,” general counsel Erin Gleaton said in an email. “We have full confidence in our position, supported by the facts and our record of regulatory compliance.”
Chevron said it does not comment on pending legal matters. The others did not immediately respond to a request for comment.
State regulations define “idle wells” as wells that have not produced oil or natural gas for 24 consecutive months, and “exhausted wells” as those that yield an average daily production of two barrels of oil or less. California is home to thousands of such wells, according to the California Department of Conservation.
Idle and exhausted wells can continue to emit hazardous air pollutants such as benzene, as well as a methane, a planet-warming greenhouse gas. Unplugged wells can also leak oil, benzene, chloride, heavy metals and arsenic into groundwater.
Plugging idle and exhausted wells includes removing surface valves and piping, pumping large amounts of cement down the hole and reclaiming the surrounding ground. The process can be expensive, averaging an estimated $923,200 per well in Los Angeles County, according to the California Geologic Energy Management Division, which notes that the costs could fall to taxpayers if the defendants do not take action. This 2023 estimate from CalGEM is about three times higher than other parts of the state due to the complexity of sealing wells and remediating the surface in densely populated urban areas.
The suit seeks a court order requiring the wells to be properly plugged, as well as abatement for the harms caused by their pollution. It seeks civil penalties of up to $2,500 per day for each well that is in violation of the law.
Residents living near oil fields have long reported adverse health impacts such as respiratory, reproductive and cardiovascular issues. In Los Angeles, many of these risks disproportionately affect low-income communities and communities of color.
“The goal of this lawsuit is to force these oil companies to clean up their mess and stop business practices that disproportionately impact people of color living near these oil wells,” County Counsel Dawyn Harrison said in a statement. “My office is determined to achieve environmental justice for communities impacted by these oil wells and to prevent taxpayers from being stuck with a huge cleanup bill.”
The lawsuit is part of L.A. County’s larger effort to phase out oil drilling, including a high-profile ordinance that sought to ban new oil wells and even require existing ones to stop production within 20 years. Oil companies successfully challenged it and it was blocked in 2024.
Rita Kampalath, the county’s chief sustainability officer, said the county remains “dedicated to moving toward a fossil fuel-free L.A. County.”
“This lawsuit demonstrates the County’s commitment to realizing our sustainability goals by addressing the impacts of the fossil fuel industry on front line communities and the environment,” Kampalath said.
Business
Instacart is charging different prices to different customers in a dangerous AI experiment, report says
The grocery delivery service Instacart is using artificial intelligence to experiment with prices and charge some shoppers more than others for the same items, a new study found.
The study from nonprofits Groundwork Collaborative and Consumer Reports followed more than 400 shoppers in four cities and found that Instacart sometimes offered as many as five different sales prices for the exact same item, at the same store and on the same day.
The average difference between the highest price and lowest price on the same item was 13%, but some participants in the study saw prices that were 23% higher than those offered to other shoppers.
The varying prices are unfair to consumers and exacerbate a grocery affordability crisis that regular Americans are already struggling to cope with, said Lindsey Owens, executive director of Groundwork Collaborative.
“In my own view, Instacart should close the lab,” Owens said. “American grocery shoppers aren’t guinea pigs, and they should be able to expect a fair price when they’re shopping.”
The study found that an individual shopper on Instacart could theoretically spend as much as $1,200 more on groceries in one year if they had to deal with the kind of price differences observed in the pricing experiments.
At a Safeway supermarket in Washington, D.C., a dozen Lucerne eggs sold for $3.99, $4.28, $4.59, $4.69, and $4.79 on Instacart, depending on the shopper, the study showed.
At a Safeway in Seattle, a box of 10 Clif Chocolate Chip Energy bars sold for $19.43, $19.99, and $21.99 on Instacart.
Instacart likely began experimenting with prices in 2022, when the platform acquired the artificial intelligence company Eversight. Instacart now advertises Eversight’s pricing software to its retail partners, claiming that the price experimentation is negligible to consumers but could increase store revenue by up to 3%.
“These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable,” an Instacart spokesperson said in a statement to The Times. “The tests are never based on personal or behavioral characteristics.”
Instacart said the price changes are not the result of dynamic pricing, like that used for airline tickets and ride-hailing, because the prices never change in real time.
But the Groundwork Collaborative study found that nearly three-quarters of grocery items bought at the same time and from the same store had varying price tags.
The artificial intelligence software helps Instacart and grocers “determine exactly how much you’re willing to pay, adding up to a lot more profits for them and a much higher annual grocery bill for you,” Owens said.
The study focused on 437 shoppers in-store and online in North Canton, Ohio; Saint Paul, Minn.; Washington, D.C., and Seattle.
Instacart shares were down more than 5% in midday trading on Wednesday and have risen 1% this year.
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