27.01.25 - Big shake up

A Chinese startup, Deepseek, is shaking up the AI industry and is challenging the US dominance. Deepseek has launched a new AI model which industry experts claim to be as good or even better than those developed from tech giants like Google or OpenAI. While Silicon Valley firms have invested billions in developing their models, Deepseek achieved this milestone with a remarkably modest investment of just USD 5.6 million.

Markets: Nasdaq Futures down more than 3% (time of writing), cryptos sell-off, China’s stock markets stable with solid gains. Defensive stocks in the green, interest rates down, Swiss Franc stronger with safe haven demand arising, volatility jumps

My View: Is there an AI disrupter around the horizon? The recent news has definitely the potential to challenge the entire valuation of the AI industry and could burst the AI bubble.
For nearly a year now, I have maintained the view that the AI sector appears to be an overly crowded space. While speculators are now retreating from the markets in fear, I remain calm, with my well-diversified and stable portfolio. My short positions on some crowded stocks in that sector and the long volatility trade are kicking in. My latest addition to this list of short positions, as of last Friday, include Vistra and Constellation Energy, among the top losers in pre-market today.

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