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The artificial-intelligence market is in turmoil.
Hard to believe, but AI only seized the spotlight with the release of ChatGPT in fall 2022. Investor enthusiasm for AI since then has been a major factor behind the stock market’s stunning gains.
That is, until this past Monday. The Chinese startup DeepSeek stunned investors with its AI models created at a fraction of the cost of the main AI options. DeepSeek’s cheaper AI tools are “one of the most amazing and impressive breakthroughs,” marveled Silicon Valley legend Marc Andreessen. The enthusiasm for owning the Magnificent Seven — Amazon, Microsoft, Apple, Alphabet, Nvidia, Meta and Tesla — abruptly turned cold.
The reaction isn’t surprising. Speculative, tech-driven booms often lead to spectacular busts as innovators and investors struggle to figure out how to create new products and learn new processes. A major implication of DeepSeek is that exploiting the productivity promise of AI will be cheaper than expected for users.
“Although it disrupts the AI status quo, it should speed the proliferation of AI and the realization of associated productivity gains,” wrote Wall Street economist Ed Yardeni. Adds John Cochrane, economist at the Hoover Institution: “The winners will not be the producers of AI, which looks to become a marginal cost commodity with remarkable speed, but the users of AI.”
Financiers are trying to figure out the market implications of DeepSeek. I want to highlight a different investment message from DeepSeek: The importance of preparing for AI by investing in your skills and knowledge.
I recently moderated a panel on “Five Generations in the Workplace” at a conference at Stanford University. One theme among the experts is that AI is taking deeper root in the workplace (and this was before the DeepSeek moment). The labor market uncertainty with AI is profound, but it’s a safe bet the powerful new technology will also eliminate, transform and create jobs.
The uncertainty about jobs led to another major theme among the panelists: The need for workers at all stages of their careers to prepare for greater job churn. The personal finance answer to AI is to invest in your education, skills and knowledge. (Leaders also need to invest much greater resources into lifelong learning, including training and education).