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Why Chinese AI company DeepSeek is spooking investors on U.S. tech

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Why Chinese AI company DeepSeek is spooking investors on U.S. tech

Major U.S. tech stocks, including Nvidia, Oracle and Broadcom, plummeted Monday after Chinese artificial intelligence startup DeepSeek unveiled a new system that it says can compete against OpenAI’s ChatGPT model at a much lower cost.

The stock of chipmakers Nvidia and Broadcom plunged about 17%, while the stock price for Oracle declined 14%. The tech sell-off brought the broader stock market down with it. The Standard & Poor’s 500 index dropped 1.5% and the tech-focused Nasdaq 100 sank 3%.

“Companies are worried that DeepSeek will crush the profit capabilities of U.S. AI giants,” said Ray Wang, chief executive of Constellation Research, a research and advisory firm in Silicon Valley.

Despite its market-moving clout, DeepSeek is hardly a household name in the U.S. Here’s a primer.

What is DeepSeek and who is behind it?

DeepSeek is a Chinese startup that develops open-source AI models, similar to ChatGPT, which helped bring generative artificial intelligence to the mainstream.

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Its mobile app surged to the top of Apple’s download charts in the U.S. after its release in early January. The DeepSeek mobile app was downloaded 1.6 million times by Jan. 25 and ranked No. 1 in iPhone app stores in Australia, Canada, China, Singapore, the U.S. and the United Kingdom, according to data from market tracker App Figures.

The app distinguishes itself from other chatbots such as OpenAI’s ChatGPT by articulating its reasoning before delivering a response to a prompt. The company claims its latest model, DeepSeek-R1, offers performance on par with OpenAI’s latest system, and lets individuals interested in developing chatbots on the technology build on its software.

DeepSeek caught the attention of Silicon Valley by saying it could compete with OpenAI at lower costs. DeepSeek said it needed only roughly 2,000 specialized computer chips from Nvidia to train its chatbots, according to the New York Times. U.S. companies, by comparison, use supercomputers with as many as 16,000 chips and sometimes more, the newspaper reported.

Hedge fund manager Liang Wenfeng founded DeepSeek in 2023. Liang co-founded the hedge fund High-Flyer with college friends in 2015 shortly after graduating, according to the Wall Street Journal.

Why did U.S. tech stocks take such a hit?

On Monday, Nvidia lost roughly $600 billion in market value, the biggest single day drop for a company in U.S. history, according to CNBC.

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Investors worry that if DeepSeek can build a model that requires fewer chips, that would reduce the demand for the types of semiconductors Nvidia and other firms supply. It also could reduce the competitive edge of U.S. tech giants that have invested billions in AI technology.

Washington has banned the export of high-end technologies such as graphics processing unit semiconductors (or GPUs, which are crucial for AI technology) to China, in a bid to stall the country’s advances. But DeepSeek’s progress suggests Chinese AI engineers have worked their way around the restrictions, focusing on greater efficiency with limited resources.

“The DeepSeek model is … very impressive, especially since DeepSeek had to navigate strict chip restrictions from the U.S.,” wrote Wedbush Securities analyst Daniel Ives in a Monday research note. “It remains to be seen if DeepSeek found a way to work around these chip restrictions rules and what chips they ultimately used, as there will be many skeptics around this issue given the information is coming from China.”

How much of a threat does China pose to U.S. dominance in the AI market?

The U.S. is still a major leader in the artificial intelligence sector, capturing 68% of the global venture capital funding in AI companies in the third quarter of last year, according to CB Insights. The Silicon Valley geographic area took up roughly half that amount.

Some of the leaders in the space including San Francisco-based startups such as ChatGPT maker OpenAI and Anthropic, as well as blue chip tech giants including Google’s parent company, Alphabet, and Meta. Alphabet’s stock fell 4% on Monday, while Meta’s rose slightly.

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Some analysts were skeptical about the veracity of DeepSeek and what the model can actually accomplish. After all, other companies probably would try to match DeepSeek’s savings.

“What DeepSeek showed is that there are lots of efficiency gains that every AI company can achieve,” Wang said. “However, we haven’t verified if this is true or not and what problems are being solved.”

He said China is a “strong competitor,” but “the psychological operations warfare as we saw today is more powerful than what they really can deliver.”

How will the Trump administration respond?

Trump has emphasized the importance of America being a leader in AI technology and innovation.

After Trump started his second term as president, he rescinded an executive order signed by President Biden in 2023 that required AI companies to share their safety test results with the U.S. government.

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Although some people in the tech industry applauded Biden’s executive order as a way of establishing guardrails and guidelines for AI companies, others expressed concern that it could stifle innovation. Trump while a candidate warned that Biden’s policies, including that executive order, weren’t working.

On Monday, David Sacks, Trump’s White House AI and crypto czar, said DeepSeek has shown the AI race will be very competitive.

“President Trump was right to rescind the Biden EO, which hamstrung American AI companies without asking whether China would do the same. (Obviously not.),” Sacks wrote Monday on social media platform X. “I’m confident in the U.S. but we can’t be complacent.”

Trump last week announced that OpenAI, Oracle and Softbank are committing $100 billion to an initiative called the Stargate project, with plans to invest $500 billion in AI infrastructure over the next four years. Trump said it would help create more than 100,000 U.S. jobs.

Bloomberg contributed to this report.

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Fire-damaged Pacific Palisades shopping center sets reopening date

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Fire-damaged Pacific Palisades shopping center sets reopening date

The luxury shopping center in Pacific Palisades will reopen next month after more than $100 million in renovations forced by the January 2025 wildfire that devastated the Los Angeles neighborhood.

Palisades Village will reopen Aug. 15, owner Rick Caruso announced Wednesday. The outdoor center survived the blaze that destroyed homes and other businesses but needed refurbishment to eliminate contaminants that the fire could have spread.

Crews are putting finishing touches on mall buildings after tearing them down to the studs, treating the wood and rebuilding the walls, Caruso said.

“Everybody’s working, and stores are moving their products in,” he said. “It’s a really cool feeling that people have really locked arms and are working together.”

An electrician installs lighting for a restaurant at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.

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(Myung J. Chun / Los Angeles Times)

Pacific Palisades resident Allison Polhill, who is rebuilding the home of 30 years that her family lost in the blaze, said she is “thrilled” at the prospect of returning to the mall she used to frequent. Its comeback is a boost for the community, she said.

“Every single step that we make to reopen our commercial corridors is going to bring more people back into the Palisades,” said Polhill, who expects to move back into her home at the end of August.

A total of 6,822 structures were destroyed in the Palisades fire, including more than 5,500 residences and 100 commercial businesses, according to the California Department of Forestry and Fire Protection.

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Caruso previously attributed the mall’s survival to the hard work of private firefighters and the fire-resistant materials used in the mall’s construction.

The $200-million shopping and dining center opened in 2018 with a movie theater and a roster of upmarket tenants, including Erewhon, which may be the only grocer in the heart of the fire-ravaged neighborhood when it opens.

Caruso’s company was able to fill the mall with tenants despite the long shutdown.

Palisades Village is 99% leased, with the majority of tenants returning, said Jackie Levy, chief financial and revenue officer. Nearly one-third of the shops and restaurants are new to the property.

A firefighter carries a hose back to his rig while walking through a destroyed home in Pacific Palisades.

A firefighter carries a hose back to his rig while walking through a destroyed home from the Palisades fire in Pacific Palisades on Jan. 7, 2025.

(Genaro Molina / Los Angeles Times)

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Last year, Pacific Palisades-based fashion designer Elyse Walker said she would reopen her eponymous store in Palisades Village after losing her 25-year flagship location on Antioch Street to the inferno.

Other neighborhood shops destroyed in the fire that are reopening at the mall include K Bakery and Loomey’s Toys, which caters to children up to age 12 and used to be across the street from Palisades Elementary Charter School.

“It’s been a journey and I’m excited because I wasn’t sure that there was going to be a place to come back to,” said toy store owner Amanda Rastegar. “Hopefully we can bring some of that magic back.”

Rastegar’s home in the Palisades survived but was damaged by the fire. The family returned about eight weeks ago. Her last memory of the fire was a burning supermarket.

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“I just couldn’t wrap my brain around what was happening,” she said. “By the time I left, Gelson’s was on fire.”

Among the returning tenants is Angelini Ristorante & Bar. Well-known Los Angeles chef Gino Angelini said he will be in the kitchen next month for a return of the Italian restaurant.

“We won’t do a big celebrity open,” he said. “We want to have a very soft opening and see our customers come back.”

Construction takes place at Rick Caruso's Palisades Village

Construction takes place at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.

(Myung J. Chun / Los Angeles Times)

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An elaborate celebration would not feel “correct for me,” Angelini said, because the devastation has been “very sad” for so many.

Other new tenants include local chef Nancy Silverton, who has agreed to move in with a new Italian steakhouse called Spacca Tutto. Women’s activewear retailer LESET will open its first West Coast location.

Caruso said he is optimistic that customers will return to the center, even though many Pacific Palisades residents are still dispersed. One tracking system estimated that about 30% of the Village’s customer base was impacted by the fire, he said.

“That means 70% did not get impacted, so there’s a lot of customers still left out there,” Caruso said. Historically, the center drew customers from as far away as Beverly Hills and Calabasas, as well as Malibu, Brentwood and Santa Monica.

He also hopes many will be inspired to visit the revived mall.

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“I believe in the goodness of people and I believe that people are going to want to support the Palisades,” he said. “They’re going to want to be there and support the businesses that have had the courage and the heart to reopen.”

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Walmart’s EV chargers are coming to California with discounts for members

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Walmart’s EV chargers are coming to California with discounts for members

Walmart is rapidly expanding its network of electric vehicle chargers designed for customers to use while they shop.

The network could help fill gaps in EV infrastructure in states with greater need for chargers. Walmart, which has more than 5,000 locations in the U.S. and hundreds in California, says more than 90% of Americans live within 10 miles of one of its stores.

The chargers also offer an incentive for customers to choose Walmart — Walmart Plus members will receive a 10% discount off an average price of $0.46 per kilowatt-hour of energy at the company’s chargers.

Walmart chargers are already available at more than 75 locations in 17 states, with Texas boasting the most charging stations, followed by Florida and Arizona.

Matthew Nelson, Walmart’s director of energy policy, said last week on LinkedIn that the network will soon reach 29 states, including California.

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“We are delivering on the promise of affordable, reliable and convenient charging,” Nelson said in his post.

According to Walmart’s website, six charging stations are coming to California soon, though the company did not offer a specific timeline.

The chargers will be installed at stores in Antelope, Brea, Fresno, Stockton, Suisun City and Vallejo.

Most charging sites in California will include eight to 16 fast-charging stalls, said Walmart spokesperson Kelsey Bohl.

The company first announced plans in April 2023 to install its own EV chargers at Walmart and Sam’s Club stores, with a goal of installing thousands of chargers by 2030. Partnering with ABB E-Mobility and Alpitronic, it added 25 new charging sites this past May and six more in June.

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“Walmart is building a leading retail-integrated EV fast-charging network, focused on delivering an affordable, reliable and convenient charging experience where customers already shop,” Bohl said in an emailed statement. “Customers can charge while they shop, access stations through the Walmart app they already use, and benefit from affordable pricing.”

The charging stations already available include 612 individual charging stalls using 400-kilowatt chargers. Each stall has a dual charging cord with both Combined Charging System and North American Charging Standard connectors. The standard connectors, designed by Tesla, are smaller and lighter than the combined systems.

The primary way to pay for the chargers is through the Walmart app, but the company is also experimenting with built-in credit card readers to allow those without the app to use the stations.

Customers can check charger availability on the Walmart app. The company said the chargers will be available 24 hours a day.

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Waymo reports teen riders for bad behavior and delivers them to the police

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Waymo reports teen riders for bad behavior and delivers them to the police

Robotaxis could be turning into robocops.

A self-driving Waymo reported two teens to San Mateo, Calif., police on Monday after they were found drinking alcohol and shooting toy guns in the back of the vehicle.

According to a social media post from the San Mateo Police Department, officers detained two 15-year-olds after the Waymo they were riding in contacted the department and stopped in a parking lot until law enforcement arrived.

“Parents do you know where your teens are?” the San Mateo Police Department wrote on Facebook following the incident. “Waymo does!”

Officers removed both teens from the vehicle and determined they were using toy guns to shoot Orbeez out the windows. Orbeez are small, water-absorbing beads sold at toy stores.

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“Toy guns, water guns, and BB guns all pose real dangers, especially to an untrained eye,” the Police Department said. “The simple handling of them can cause fear in [passersby].” “

A video posted on Facebook shows at least five officers and a police dog responding to the scene and approaching the Waymo with their weapons raised.

Waymo did not immediately respond to a request for comment.

Waymo vehicles have internal cameras and microphones that may be used in an emergency or to “promote safety and security,” according to Waymo’s online support page.

The cameras are also used to ensure the vehicles are clean and to help find lost items, according to the support page.

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The company said it does not use facial recognition or other biometric identification technologies to identify individuals.

“In more urgent circumstances, support may access live video during a trip,” the Waymo page said.

The San Mateo Police Department’s Facebook post has garnered nearly 60 comments, with one user accusing Waymo of “snitching.”

“At least they got a designated driver?!” one user commented.

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