I'm sure by now we have all felt the ripples and news articles all about the new artificial intelligence developed by High-Flyer as a "side project" that turned into one of the single largest day losses that any business has seen in the stock market, with Nvidia losing 600 billion off their market cap. (Nvidia sheds almost $600 billion in market cap, biggest one-day loss in U.S. history.)

The current industry of AI faces a massive issue: how do we monetize it properly? They spend billions of dollars and energy resources training and developing these models to sell them at a significant loss based on their investments. Sam Altman from OpenAI has even stated that even with their top tier at $200 a month, they are losing money on that tier. So the billion-dollar problem now is we have invested all of this money into artificial intelligence but have no good way to recoup the losses that were made by developing it.

That's not the only issue that approaches the market either. Enter Deep-Seek, funded by a hedge fund in China with tons of extra GPUs just sitting around and interested in making a new artificial intelligence that will shock the market. And done with 5.5 million dollars, compared to the billions sunk into OpenAI, challenges their domination in the AI market and signals a massive shift.

It Gets Worse For America's AI

Deepseek is open source, meaning that the entire model is available to anyone, for free, forever. Lots of people also mention that it's a "censored" artificial intelligence, but when run locally, the censorship is no longer present. While running the R1 model, we still see it takes tons of hardware; it's cheaper to get that hardware and host it yourself than pay $200 a month. This is a big positive step to actually having "Open AI" as these models are released for free to the market, making powerful local AI machines not dependent on an organization's servers.

This major blow to OpenAI and other AI makers has caused a run in the market as people wonder if they can make it so much more efficiently than OpenAI. Why should they be invested in OpenAI if another company can do it cheaper? That's why we saw red all across the board in market caps. Negative for those trading stock, but a very important step forward and positive for those using the tool of AI in their corporation.

As predictions for the future, open-source models are only just going to get better and better. For-profit companies are really going to struggle with their 600 billion dollar problem of how to make money off of something that there are better free versions of. I do not recommend investing in major tech companies, as it's likely only to get worse for them from here.

Tyler Olson

olsontyler.com