OpenAI’s Sam Altman scrambles to answer DeepSeek menace | Invesloan.com

Good morning and welcome back. Today we are covering:

• The fallout from DeepSeek’s AI release

• Bessant’s proposal of universal tariffs

• The remaining short sellers

• Titian’s revived garden

OpenAI chief executive Sam Altman has promised to deliver “much better models” after advances by Chinese start-up DeepSeek yesterday sent shockwaves through Silicon Valley and global stock markets.

Nvidia, which produces the chips used to train large AI models, saw nearly $600bn wiped off its market capitalisation as the success of DeepSeek’s budget generative AI chatbot raised questions about America’s dominance in the global artificial intelligence arms race. The tech-focused Nasdaq fell 3 per cent, but Nvidia shares look set for a partial rebound today.

Altman yesterday wrote on X that DeepSeek’s model was “impressive”. Pat Gelsinger, who was recently ousted as chief executive of Intel, wrote on LinkedIn: “DeepSeek is an incredible piece of engineering that will usher in greater adoption of AI.”

US President Donald Trump called the release of DeepSeek’s R1 “a wake-up call for our industries that we need to be laser-focused on competing to win”.

DeepSeek’s success has complicated the argument that massive cash piles create an unassailable advantage in AI, a belief that has helped leading Silicon Valley labs raise tens of billions of dollars over the past year.

Microsoft, Meta, Alphabet, Amazon and Oracle have earmarked $310bn in 2025 for capital expenditure, which includes AI infrastructure, according to data compiled by Visible Alpha.

“The winners won’t be the ones burning the most cash,” said Aidan Gomez, founder of Toronto-based Cohere, which builds large language models for enterprises. Here’s more reaction from venture capitalists and tech industry executives.

And here’s what else you need to be aware of today:

• US interest rates: The US Federal Reserve’s Federal Open Market Committee begins a two-day meeting.

• Results: It’s another busy day of earnings from Boeing, General Motors, Lockheed Martin, Royal Caribbean and Starbucks.

The FT is holding an in-person and online event on Thursday focused on rethinking how the world prepares for, responds to, and finances climate related crises. Register here.

Five more top stories

1. Donald Trump’s Treasury secretary Scott Bessent is pushing for new universal tariffs on US imports to start at 2.5 per cent and rise gradually, said four people familiar with the proposal. The president ramped up the tariff rhetoric yesterday in a speech in Florida. “We have to bring production back to our country,” the president said. Here’s how Bessent’s proposal would work.

• More on Trump and trade: US President Donald Trump has pushed India’s Prime Minister Narendra Modi to buy more American-made weapons.

• Latin America: Regional leaders are to hold an emergency summit to respond to Donald Trump’s threats of mass deportations and sudden tariffs.

2. The EU and Nato have taken a vow of silence over Greenland after Denmark requested its allies refrain from reacting to Donald Trump’s threats to seize the Arctic island. Copenhagen’s strategy, which four officials said was closely co-ordinated with Nato and the EU, underscores the scramble among US allies to work out how to handle the president’s pugnacious diplomacy.

3. International hotel groups are expanding in China and converting unoccupied office blocks to hotels as they look to target younger, more cost-conscious travellers. Hyatt, IHG and Radisson are all opening new hotels in China as demand for expensive hotel rooms in the country falls.

4. HSBC will shut down key parts of its investment banking business in the UK, Europe and the Americas, the bank said in a memo to staff this morning. But the bank will keep its debt capital markets, leveraged finance, real asset finance and infrastructure finance businesses in those markets. Here’s what we know so far.

5. Robert F Kennedy Jr’s allies fear he has failed to convince enough senators to confirm him as President Donald Trump’s top health official, said people familiar with the matter. Kennedy was holding last-minute meetings with Democrats and Republicans ahead of two days of questioning by the Senate’s finance and health committees later this week. “There’s more anxiety now than ever,” said a person close to Kennedy.

News in-depth

Nate Anderson, the founder of Wall Street’s top activist short seller Hindenburg, became the latest high-profile investor to call it quit the industry. His exit leaves a cottage industry of specialists that have tried to adapt to the sector’s challenges, with varying degrees of success. These are the short sellers still standing.

We’re also reading and listening to . . . 

• Trump’s America: There are many reasons for the global south to be deeply concerned about the abandonment of a rules-based order for a world that is completely transactional, writes Gideon Rachman.

• Pakistan’s economy: The country’s military has become intimately involved in everything from canal projects to energy contracts, rattling investors.

• Tech Tonic 🎧: Murad Ahmed talks to venture capitalist Reid Hoffman about AI, Trump and the impact of deregulation on Silicon Valley. Listen here or read the transcript.

Question of the day

The slump in Nvidia’s share price yesterday raised questions about AI’s financial model in the west. DeepSeek’s R1 boasted a similar performance to OpenAI’s ChatGPT and Meta’s Llama large language model for a fraction of the investment. DeepSeek also broke with Silicon Valley’s tradition and released the source code, opening up its potential to other developers. Nvidia has been one of the biggest beneficiaries of the AI boom. Do you think its shares have peaked? Take part in our latest poll.

Take a break from the news . . . 

Fifteen minutes away from St Mark’s Square is Titian’s former Venetian home, where the artist lived for more than four decades until his death. The garden on the property has now been revived by its current owners into a private escape worthy of the great painter himself.