| This is Bloomberg Opinion Today, an open-source reasoning model built by Bloomberg Opinion's opinions. Sign up here. I Hate to Burst Your Bubble, But ... | Seven months ago, Matt Levine said "people who got good at building computers that can pick stocks are pivoting to processing natural language." The pivot is now complete, and Nvidia is $589 billion lighter today because of it: The recent success of DeepSeek, an open-source reasoning model built by a Chinese quant fund, triggered the largest single stock market selloff in US history. To put that into context: In a single day, Nvidia's market cap lost more money than President Trump said will eventually be funneled into his administration's highly controversial AI project, "Stargate." Adding to the awkwardness, DeepSeek was built on a "joke of a budget," according to one of OpenAI's founding members. The company claims it spent around $5.5 million to train its V3 model — pennies compared to what Microsoft and Meta have plowed into AI.  Parmy Olson says the panicked selloff "points to major blind spots that both Wall Street and tech firms have had on AI," but our columnists can't say they didn't see this coming. Last year, Catherine Thorbecke said Washington's attempts to hold China back in the AI race could backfire. At the same time, Nir Kaissar noted that the future of AI was uncertain, as was Nvidia's role in it. Merryn Somerset Webb, meanwhile, was asking whether we'll ever learn to avoid bubbles. It seems Tyler Cowen answered that question two weeks ago when he said, "I've played around with DeepSeek for several days, and it is one of the best LLMs of the dozens I have used over the last few years." And Tyler wasn't even talking about DeepSeek's latest model, R1, which is even more impressive. Especially if you're a sucker for sentences that contain words like "homunculus" and "kabbalistic sigil." Naturally, DeepSeek has overtaken ChatGPT in the US App Store and on Google and in my mind as The Thing That Will Eventually Replace My Desk Job. Yet a lot of questions remain about the Chinese-made AI model, and Joe Weisenthal warns "people should be on guard for narratives that are too satisfying." One narrative being that DeepSeek's open-source, allegedly cheap structure will eventually render a chipmaker like Nvidia useless. "That case would be extremely good for human flourishing … but terrible for stock market valuations," Matt writes. On the flip side, there's Jevons Paradox, which would mean all this newfound efficiency would create more avenues for Big Tech to move fast and break things. Either way, investors would be wise to protect their portfolios against the pandemonium: "With DeepSeek hype still largely indistinguishable from reality, the main lasting lesson may be that diversification still matters," Jonathan Levin writes. If this is "AI's Sputnik moment," as Marc Andreessen has called it, Parmy says Silicon Valley broligarchs will need to drop their "ego-driven, my-model-is-bigger-than-yours-contest," and focus on designing products that are actually useful for businesses. "The great irony is that OpenAI's Sam Altman and other AI leaders can finally relate to the workers their AI systems are displacing. Now they must try and do more with less, or see themselves displaced too," she concludes. Bonus DeepSeek Listening: Has Silicon Valley poured too much cash into AI? If so, what else should it focus on? Join Bloomberg Opinion's Jonathan Levin, Parmy Olson, John Authers and Dave Lee for a live Q&A Tuesday, Jan. 28, at 11 a.m. EST. MAGA's Corporate Vibe Shift | Although the Trump administration's anti-woke crusade comes as no surprise to Beth Kowitt, she says "the speed at which some companies have changed their policies" makes one wonder whether diversity, equity and inclusion was an act all along. On Friday, Target joined a raft of companies — Walmart, McDonald's, Lowes, Amazon and others — when it announced it was forgoing its DEI goals and ending a program that showcased Black- and minority-owned businesses. Although some are calling for boycotts, investors seem rather unfazed, if not pleased, by the rollback: Then there's ESG, another popular pandemic-era acronym. The green investing strategy was already under attack before Trump took office, and now John Authers says it may soon become illegal. To schoolchildren, the sudden erasure of these three-letter terms likely amounts to little. But kids aren't immune to the way the world is changing, says Mary Ellen Klas. "Allowing immigration raids in schools, pardoning violent felons and rolling back climate protections send disturbing messages to young people," she writes. Efforts to deport migrants can be traumatic for kids whose parents aren't even involved, plus, it puts their safety at risk. Roughly 40% of unauthorized people in the US are from Mexico, and Shannon O'Neil says measures to send migrants back across the border are "a boon" to drug cartels.  Then there's Trump's assertion that there are only two sexes, male and female, which flies in the face of decades of lived experience of trans people in America. "Never mind bathrooms, diversity, equity and inclusion, culture wars and everything else that the notion of transwomen tend to evoke. The real issue is power," Kathryn Anne Edwards writes. Still, Erika D. Smith says Democrats have the power to push back with facts. "Most Americans don't know someone who is transgender or nonbinary," she writes, in effect leaving the door open for Republicans "to resort to lies and fear-mongering." Seemingly everywhere you look, the new guard is dismantling the old guard. "We're in an era of retrenchment, and elections have consequences. Still, the scope is astonishing," writes Stephen Carter. And, mind you, it's only January. In a new sweeping feature for Bloomberg Opinion, Toby Harshaw asks a number of hard-hitting questions about Iraq's future: Is there hope that anything good can come from the toppling of Saddam Hussein — which occurred before about half of today's Iraqis were even born? Can sectarian strife give way to a functioning polity? Will Iraq's government establish real sovereignty, or is it doomed to puppethood under Iranian domination? Looming above it all is a 100-year-old question: Is Iraq even a "real" place?
While I cannot attempt to answer all these questions in a newsletter — for that I'd need to pick up a copy of Land Between the Rivers: A 5,000-Year History of Iraq — I can tell you that yes, Iraq is real, and Toby is cautiously optimistic about its future, despite the economy being in shambles and its lackluster electoral process. "When your people rally around wars, and you start losing those wars badly, that's a big problem. But it's a problem for the Iranian people to tackle, and Iraq's future is now in the hands of the Iraqis." Huzzah for that! The UK needs a growth strategy that markets are on board with. — Bloomberg's editorial board Freshwater from Greenland's icebergs can't quench the planet's thirst. — David Fickling If Israel "cleans out" Gaza, it would be a textbook case of ethnic cleansing. — Marc Champion Preserving old trees might be one of our best hopes at mitigating climate change. — F.D. Flam A dose of DOGE (sans Elon Musk) is just what Europe's doctor ordered. — Lionel Laurent Mapping Trump's tactics in Colombia. RTO is strict unless you're the Chosen One. Eggs may be expensive forever. The hottest dogs in New York and New Jersey. Child stars found love in a hopeless place. They saved 54 horses but lost the farm in the fire. Notes: Please send Rutt's Hut rippers and feedback to Jessica Karl at jkarl9@bloomberg.net. Sign up here and find us on Bluesky, TikTok, Instagram, LinkedIn and Threads. | 
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