After the arrival of a less costly A.I. model from China, U.S. markets and academics are wrestling with the ultimate economic value of the technology.The recent introduction of a more affordable A.I. model from China has sparked discussions among U.S. markets and academics about the true economic value of this technology. A.I. chatbots have been a source of entertainment and even utility, and have captivated investors and driven the U.S. stock market. However, the impressive performance of DeepSeek, a new A.I. engine from a Chinese start-up, has caused concern and complicated the narrative surrounding A.I. Companies that were once swept up in the A.I. frenzy, such as Nvidia, Meta, Alphabet, Microsoft, Amazon, Tesla, and the private start-up OpenAI, are now being re-evaluated by investors. The idea that superhuman intelligence is just around the corner has led to sky-high valuations, as well as worries about the potential political and social risks associated with advanced A.I.
One pressing question is whether the current approach to developing A.I. in the U.S. – investing billions of dollars into chips and infrastructure – is worth it for all companies, when similar results can be achieved at a much lower cost. The emergence of DeepSeek’s more affordable innovations has added urgency to long-standing financial questions: how much are A.I. companies truly worth, and what will be the overall economic impact of A.I. in the long run?
Daron Acemoglu, a recipient of the 2024 Nobel Prize in economic science, provided some insights on these questions. “There is a lot of hype in the industry,” he said in a phone interview. While A.I. companies have made impressive strides, he believes that many financial and economic projections are exaggerated. As an economist at M.I.T. with a focus on the effects of technological advancements on the global economy, Acemoglu is skeptical of the more extreme claims about A.I. He does acknowledge that A.I. is a significant advancement, with a potential macroeconomic impact similar to that of the telephone – which is no small feat.
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