In the week ending 24 January, a previously unknown Chinese start-up presented an artificial intelligence large language model apparently showing a performance comparable to that of the leading US models. The unexpected development could disrupt the paradigm of a quasi-monopolistic position for leading US chip manufacturer. This concern led to a major fall in valuations of some prominent tech companies. Markets have since recovered most of their poise. Here we give our view on these developments.
On Monday 27 January, the stock price of the leading US producer of powerful artificial intelligence (AI) processors fell by nearly 17%. The loss was partly reversed the following day when the same stock rallied by 9%, leading other US technology stocks higher. The NASDAQ Composite index rose by 2% on 28 January after the previous day’s sharp 3.1% decline.
The 27 January sell-off appears to have been something of a perfect storm created by factors including:
- Valuations priced for perfection
- Crowded positioning in companies exposed to datacentres
- A complete surprise to the market triggering a ‘shoot first, think later’ reaction.
You can now read the full whitepaper at the link below
