r/technology • u/s1n0d3utscht3k • Jan 27 '25
Business DeepSeek Buzz Puts Tech Stocks on Track for $1 Trillion Wipeout
https://www.bloomberg.com/news/articles/2025-01-27/nasdaq-futures-slump-as-china-s-deepseek-sparks-us-tech-concern434
u/MythicMango Jan 27 '25
this doesn't make any sense to me because tech companies are NOT generating $1 trillion worth of value from AI...
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u/Geth_ Jan 27 '25
The market does not behave rationally. People will always try to make sense of it but to me, it's a futile endeavor. The market can remain irrational longer than anyone can remain solvent.
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u/notbadhbu Jan 27 '25
I think a guy who understood this better than anyone was Karl Marx
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u/Brainvillage Jan 27 '25 edited Feb 23 '25
believe turnip octopus play sorrel swim giraffe if elephant person.
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u/Jaster-Mereel Jan 27 '25
Idiot here. What does “solvent” mean in this usage?
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u/AaronRodgersMustache Jan 27 '25
Context means basically have the money to keep it going.
Like when Michael Burry shorted the housing market, he paid exorbitant fees to hold that position. He was like a year or two early. He was right, but timing is everything.
Just because you did the math or made the right call on which direction something SHOULD go… doesn’t mean it will. Or quickly enough for you to make money on it.
Essentially the stock market is so big and has so many players.. it’s nigh impossible to tell when a big wave is about to happen. Because everyone else has to learn about it and also make a move for the wave to happen.
Being right at the wrong time still means you lost.
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u/StoppableHulk Jan 27 '25
It is also manipulated. The stock market is controlled by numerous large-money players who will do literally anything to avoid losing. That's why it took so long for the housing market bonds to be rated properly and for Burry to get his payout. They were purposefully rigging the rates to keep the bonds high.
They can't do it forever, but they can do it long enough to allow them to change positions or hedge or whatever, and then leave the little guy holding all the bags. As always.
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u/secondhandleftovers Jan 27 '25
Insolvency, cannot wait to read this word more.
Solvent means they can exist.
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u/GunBrothersGaming Jan 27 '25
The hedge funda use news to lower stock prices and create a faux dip. They then buy the stock that was sold at a bargain and it goes back up.
Same thing happened to Google when OpenAI came out. Its just used for market manipulation. Nvidia stock might be harder to recover but it will.
My guess is that this is going to be picked apart and Google and OpenAi will figure out how they optimized it, do it better, and DeepSeek will be on the floor.
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u/Eric1491625 Jan 27 '25 edited Jan 27 '25
this doesn't make any sense to me because tech companies are NOT generating $1 trillion worth of value from AI...
The assumption is that it will in the future.
There are more than 1 billion white-collar workers in the world earning more than 20 trillion dollars a year in salaries. If AI can replace just 10% of that it can derive 2 trillion in revenue and probably 1 trillion in profit.
There's no doubt that AI will generate massive wealth in the world. The question is how this wealth will be distributed. Will it be broadly spread amongst the people, or will it be concentrated in a few winner-take-all companies?
That's why the prospect of open source and China brings down stock prices. For massive AI stock valuations, it's not enough to prove that AI brings massive value to the world - it also assumes that the few big tech companies can monopolise this value.
The low cost of DeepSeek is the point here. Traditionally it is assumed that due to the massive economies of scale and startup costs (hundreds of billions), it's just impossible to compete with an incumbent because no newcomer can simply raise $100B. But if it costs just 100M instead of 100B? Plenty of competitors can enter, and there is no monopoly profit.
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u/BuyThisUsername420 Jan 27 '25
This was a great way to explain how speculation works in investment. It a simple concept, but no one really explains to people unless they go to business courses what all these values are and seeing the original commenters confusion on it made me realize it.
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u/SmarchWeather41968 Jan 27 '25
This deepseek news is a nothingburger. Spending more gets you more - all these people with all these gpus will just use deepseeks techniques to derive even more powerful performance
People think this is the end of AI and they're dreaming. This just proves that AI is the future and that there's far more places to go with it. Traditional models were running up against moores law, and this is a paradigm change.
It's like saying we reached peak computing in 2010 when CPUs all topped out at 4 ghz and couldn't get any faster.
They didn't. So we found new ways to make them better.
This is a new way to make AI better.
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u/Gizmophreak Jan 27 '25
The question is how this wealth will be distributed. Will it be broadly spread amongst the people, or will it be concentrated in a few winner-take-all companies?
When has generated wealth been broadly distributed? Who'd spend money creating tech to make others richer?
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u/FaultElectrical4075 Jan 27 '25
Open source software is a great example of this.
When technological development is not cost-prohibitive, people will do it for all sorts of reasons other than profit. It’s only when doing research costs billions of dollars that for-profit companies are able to monopolize the research, because they are the only ones who can afford to do it.
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u/Dawn-Shot Jan 27 '25
The stock market is largely based on bullshit.
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u/peteybombay Jan 28 '25
...and people's "feelings" about the worth of a company even despite what it has done or can do in the real world.
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u/not_creative1 Jan 27 '25
Too many people drank the “American AI will rule the world” cool aid. The understanding was AI would eventually take over most jobs and create trillions in value (like internet and computers did) but it would all go to American companies.
Chinese AI demolished that delusion and American companies realised they have real competition and they have to fight this out. And they don’t have the global dominating lead they thought they did.
China is doing to Silicon Valley what they did to Detroit and German auto makers with EVs. There is no way to compete with China in cost, American tech bros always justified their story with “yeah Chinese stuff is cheap but ours is better” but now it’s not. Theirs is cheap and better
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u/dianeruth Jan 27 '25
I don't get it because better AI should increase values for everybody except the few companies making the AI. Everybody else on the downstream benefits from cheaper and faster AI access.
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u/malachiconstantjrjr Jan 27 '25
It’s not generating anything, it’s transferring the wealth of the lower class to the .1% by removing their need to pay us for what they consider menial tasks
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u/MulishaMember Jan 27 '25
Right, they’re speculating $1T in value based on a bunch of circlejerking hype.
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u/IntergalacticJets Jan 27 '25
That’s probably a sign that this isn’t 100% about a single thing (DeepSeek).
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Jan 27 '25
It's not, but it can give excuses for big tech to upcharge, which is what Microsoft has been doing.
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u/Taronar Jan 27 '25
It’s not 1 trillion in value it’s 1 trillion in capital investments and even that is over valued because much of it is fake valuations and speculators
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u/matrinox Jan 27 '25
First of all, you have to understand market valuations are predictions of the future, not right now. If something generated $1 of value a year, you wouldn’t sell it for $1 would you? That’d be too cheap
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u/theangryfurlong Jan 27 '25
Good. Everything in the US is so over-inflated that this is good for almost everyone.
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u/Kadoomed Jan 27 '25
It's probably not good for pension funds
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u/fightin_blue_hens Jan 27 '25 edited Jan 27 '25
They've been in the biggest bull run over the last 5 years in the history of the stock market. They are fine
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u/partsguy850 Jan 27 '25
Straight up. Time to correct/reset some of the stuff that doesn’t require the government. It’s probably the only way things can get right side up. Then, if something could zap the healthcare and food industry we might be able to smile. Maybe smile, for like, a whole day.
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u/RollingThunderPants Jan 27 '25
Pension funds still exist?
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u/overthemountain Jan 27 '25
Not sure if you were trying to be edgy or something but this comment just makes you look clueless. Yes, they exist and hold nearly half of the entire stock market cap.
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u/RollingThunderPants Jan 27 '25
It's not something that has ever been a part of my life. I know my grandparents and parents had them (or used to), but I know precisely ZERO people that have one now. So, maybe a little edgy, but also not exactly clueless.
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u/SlurmzMckinley Jan 27 '25
A lot of public service employees have pensions. I’m not sure if that’s the case for all states as I’ve only ever lived and worked in blue/purple states. I could see deep red states eliminating pensions in favor of other retirement plans.
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u/DressedSpring1 Jan 27 '25
Aside from private pensions there are also countries in the world where the government administers a pension fund that virtually every citizen qualifies for.
I think assuming the entire world is reflective of the United States maybe makes you a little clueless.
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u/ApartIntention3947 Jan 27 '25
A lot of companies stopped doing pensions when folks started living longer. Also, deaths weren’t always reported on time and sometimes not at all. I don’t think people stay at a job long enough to qualify for a pension if one was offered. 401k is the way to go. At least for a working class person like myself.
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u/zerosumsandwich Jan 27 '25
Are you under the impression everyone online is the same age as you and also from the same country? Whether they are clueless or sarcastic idk but you definitely come across judgemental and annoying
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u/Vazhox Jan 27 '25
Way out in left field. This doesn’t have to do with inflation. This is hurting companies and individuals
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u/AutomaticDriver5882 Jan 27 '25
This is why CloseAI CEO tripped over himself to get on to the podium with Trump to get another round of funding from Merica.
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u/K3idon Jan 27 '25
AGI just around the corner as long as he gets a check
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u/SidewaysFancyPrance Jan 27 '25 edited Jan 27 '25
The consequences for failure are more funding, if you look at recent history. Rich people are sitting on too much money and would rather piss it away at the craps table trying to double it than use it to help struggling Americans.
What pisses me off most is that as soon as the public starts to grumble about these massive investments while cutting social services, the folks like Sam Altman pivot to a "we're in this together, we need America to be competitive and have the best AI military tech, give us all your money and power plants" angle and it works.
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u/ebfortin Jan 27 '25
Brute force wasn't going to solve the problem. They were just throwing more compute at the problem instead of thinking smarter ways and strategies. Hope this market correction last.
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u/guaranteednotabot Jan 27 '25
It worked in the past and they thought they could keep pushing it. It’s always harder to improve the architecture vs putting in more money
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u/Dismal-Detective-737 Jan 27 '25
Americans just adding more cylinders and displacement. Others adding turbos and fuel injection.
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u/turkish_gold Jan 27 '25
When Stable Diffusion came out, it proved that a smarter algorithms were better than just brute force that Open AI was doing for Dal-E.
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u/ShavedPademelon Jan 27 '25
I think the amount of actual force was driven home to me when someone pointed out the amount of water used per AI question asked (I cannot verify how true it is, but it sounded legit!).
https://insidewater.com.au/artificial-intelligence-using-huge-volumes-of-water-chat-gpt-openai/
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u/unlock0 Jan 27 '25
I always question this and I’d like a technical answer. I used to do commercial HVAC testing and I've actually done a few chillers for data centers. It’s all closed loop. So I don’t understand how they get all these numbers.
In power plants they always run them by rivers and use the flowing water on the untreated side to condense the treated side. So they aren’t using up the water or contaminating it, they are temporarily diverting it to dump heat into it.
I feel like if it’s those two instances then you’re not really “using” any water as far as somehow consuming or contaminating it. You’re using it as a heat transfer mechanism with the earth or simply reusing the same water in a closed loop in combination with an air handler.
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u/General_Benefit8634 Jan 27 '25
The analysis was based upon evaporative cooling of the data center because many are not near rivers. A little misleading. They should have gone the bitcoin comparison way in that bitcoin mining uses more power than Switzerland.
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u/protomenace Jan 27 '25
The idea of water being "used" is such a vague and meaningless statistic in general because Earth is more or less a closed water system. Water doesn't get consumed, generally. It gets used and reused.
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u/Words_Are_Hrad Jan 27 '25 edited Jan 27 '25
Have you really never worked with wet cooling towers in HVAC? It is very common to use a secondary loop with evaporative cooling to pull heat out of the closed primary cooling loop.
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u/unlock0 Jan 27 '25
I did Eddy current testing of the chillers so I suppose there could be open secondaries that I never had to interact with.
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u/Cyraga Jan 27 '25
Lol. Lmao even
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u/DojimaGin Jan 27 '25
lmfao one might say if they are daring on the day
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u/Bob_Spud Jan 27 '25
This is going to make all the effort that the US has done to force the sale of TikTok look like chook feed.
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u/calgarspimphand Jan 27 '25 edited Jan 27 '25
It's gonna happen anyway. Another app will always come along. As soon as TikTok went dark, look at how quickly buzz started around RedNote. That's a real-deal Chinese government censored app too.
The TikTok controversy addressed one symptom of the problem (a Chinese app taking advantage of big data and algorithmic social media feeds to spread their ideas) instead of the root of the problem: big data and algorithmic social media feeds in the first place. But we'll never turn against Big Data and Big Tech. We'll let them rot the democratic infrastructure of the country till it collapses instead.
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u/kgl1967 Jan 27 '25
We are throwing $500,000,000,000.00 into ours. Their costs: "DeepSeek created and released its entirely open source project for about $6 million in training costs"
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u/Panda_hat Jan 27 '25
Really goes to show how much of this hype is completely overblown and just smoke and mirrors intended to grift investment funds and enrich a small number of people.
Every single person I know who has 'gone into' AI, are the most talentless lazy inept hacks I've ever met. All looking for a quick buck for minimum effort.
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u/subsurface2 Jan 27 '25
I kind of question the numbers though. 6M seems pretty low. And with all things China, how much of the whole story are we getting? But still, fuck the tech bros and their endless bullshit. Just saying China is likely not telling the whole story.
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u/CoffeeFriendish Jan 27 '25
Not hard to believe. India went to space for the price US pays for eggs.
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u/subsurface2 Jan 27 '25
Being the first comes with cost. It’s easier to copy and improve on the failures
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u/oneintheuniver Jan 27 '25
They published whitepapers about how thew did it along with their models, and “democratic” data-scientists already verified them.
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u/ohSpite Jan 27 '25
My portfolio is fucked this morning, a month or two wiped out instantly lmao
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u/LadyPo Jan 27 '25
I’m no finance expert, I just have a layman’s interest in it. But I highly recommend anyone in this situation to just hold. Do not sell during a super sudden downturn. The hot shot institutional traders are the early worms here, and selling after they got their fill just leaves you with scraps. In my opinion, it’s safer to hang on and wait for a rebound unless there’s good reason to believe a stock recovery is virtually impossible. Buy and hold — as long as you have reasonable investments — has traditionally been a winning strategy.
But otherwise, everyone should check the balance of their portfolio if they’re worried. Try to avoid leaning too far into one sector. Certainly don’t sit on a specific stock, especially if you’re awarded stock from your employer. Diversification is strength.
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u/ohSpite Jan 27 '25
Absolutely agreed, I looked this morning and removed my trading app from my phone home screen lol. Gotta avoid getting emotional or thinking you can beat the system.
If a company has good fundamentals this is just a blip relative to the years that come. Hold and wait
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u/QueenOfQuok Jan 27 '25
Kinda like how the U.S. economy under the Bretton-Woods agreement started to falter once the rest of the world began to recover from World War II. We only looked good from 1948-1968 because our competition was minimal.
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Jan 27 '25
Good, the tech bro billionaires were getting too uppity. Time to give them a reality check.
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u/Visual-Zucchini-01 Jan 27 '25
The battle for the future of AI isn't just about tech; it's about who controls it. Deep Seek is built on open source. Open source levels the playing field, giving power back to the people and fostering a more equitable and democratic tech ecosystem. The future of AI shoukd belong to everyone, not just the billionaires.
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u/MrMichaelJames Jan 27 '25
So glad the administration is so focused on taking over Greenland, renaming mountains and bodies of water, and rounding up people waiting on their asylum hearings.
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u/TitShark Jan 27 '25
It’s a bubble and when it pops it’s gonna be a doozy (ideally for only the wealthy tech douches)
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u/jakegh Jan 27 '25
AI getting cheaper will increase usage as it's now cheap enough for new applications where previously it didn't make sense. This doesn't directly benefit openAI/anthropic/google/microsoft/facebook as they're the ones being disrupted but it certainly does Nvidia. Nvidia's stock dropping is not logical and probably should be seen as an opportunity.
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u/font9a Jan 27 '25
If that’s all it takes to wipe $1T off the books, how solid was AIs foundation to generate wealth in reality?
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u/ass_whiskers Jan 27 '25
Bring on the Chinese Tech baby! The more China develops the more Zuck and Elon quake!
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u/Jamizon1 Jan 27 '25
I think this means US companies were milking the shit out of it, creating “churn”, to drive up the cost of doing business. Now that the little guys can play for a LOT LESS money… the big guys are going to have to figure out how to get a return on investment while their potential customers go elsewhere.
And this is why Nvidia’s value is slipping. The investors can see the writing on the wall.
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u/Vazhox Jan 27 '25
It’s unfortunate but hopefully people will wise up and things will get back on track.
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u/nullv Jan 27 '25
Good, let it burn. I'll cook an omelette in the fire and sip on my imported coffee.
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u/RustyNK Jan 27 '25
You might want to make a baked potato instead. Have you seen those egg prices???
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u/beever-fever Jan 27 '25
Someone gonna be scooping up discount AI stocks today on this manufactured news.
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u/Bramp10 Jan 27 '25
Manufactured news? Use DeepSeek and you'll see why this news is big
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u/StankyNugz Jan 27 '25 edited Feb 10 '25
bells numerous plant attempt practice liquid nine public humorous workable
This post was mass deleted and anonymized with Redact
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u/porncollecter69 Jan 27 '25
Mostly self improvement and laziness. Languages. Writing texts. Back pain exercises. Motivational things. Etc.
Of course everything comes with a disclaimer but it’s a good starting point.
Feels like ChatGPT when it first came out.
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u/ImmolatedThreeTimes Jan 27 '25
And Altman just got a trillion more dollars for more Mclarens this is just terrible.
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u/iceohio Jan 27 '25
Instantly followed by a giant buyback of stocks by the tech industry.
Lather, rinse, repeat.
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u/Left_Requirement_675 Jan 27 '25
Funny how everyone downvoted me whenever i would criticize llms.
This may not be the end of them but people are getting chin checked.
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u/jar1967 Jan 27 '25
Which is exactly why Trump wants to build a crypto reserve in the US Treasury. He will bail out his tech bro buddies by buying their crypto and a lot of his own $Trump
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u/Opening-Two6723 Jan 27 '25
Im.here for it. Seek out sms not publicly traded whe. Building your next project.
I hope twilio also takes a long bath.
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u/monumentValley1994 Jan 27 '25
I hope things like these can stick something in the dipshit techbros ass and their severely overvalued companies.
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u/TranslateErr0r Jan 27 '25
I seriously cannot be mad about this, even when I'm losing some money on the stock market on this right now.
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u/CPNZ Jan 27 '25
Bubble-inflated value that mostly never existed beyond CEO hot air...wonder what it was really worth.
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u/joedartonthejoedart Jan 27 '25
apple is tech right? they seem to be just fine today...
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u/mmihir82 Jan 27 '25
’m not sure why the market is reacting the way it is. You need the physical hardware, but it’s the models that you optimize or adjust.
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Jan 27 '25
At this point I’m just sitting back and watching the corporate fireworks fly. China’s always trying to 1-up the US in tech advancements, why stop now?
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u/o0flatCircle0o Jan 28 '25
The gop has been in power one week and already the markets are collapsing
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u/addictedtolols Jan 27 '25
i hope china, or anybody, keeps flooding the market with open source ai products so these fucking dipshit tech bros can finally shut the fuck up