The Rundown - Chinese AI Startup DeepSeek Rattles Nvidia, Nuclear Stocks Have a Meltdown

Episode Date: January 27, 2025

Stock market update for January 27, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zayad Mani, and today is Monday, January 27th. In today's episode, we tell you why a Chinese AI app has investors panicking. We also preview an action-packed week in why it might be the most important week for the stock market. Then stick around to the end of the show to find out why egg prices are soaring. All right, let's go. Well, guys, the last couple weeks have been pretty great for the stock market.

The S&P 500 was up 1.7% last week, in fact, hitting a record high on Thursday. And over the last two weeks, the S&P 500 has gone up 4.7%. Now, AI was the main story last week, and it's probably going to be the main story this week as well. Last week, Trump signed a couple executive orders around AI. There was also the $500 billion Stargate project announcement from OpenAI, SoftBank, and Oracle. There was a beef between Elon and Sam Altman. Microsoft and Medda came out later in the week talking about their plans to spend between $60 to $80 billion on AI this year.

But the biggest AI story right now is about this Chinese AI startup called Deepseek. And I feel like they're going to be the main character this week as well. We actually covered all these stories in detail on a deep dive episode over the weekend. So if you want to catch up on all the AI stuff, go give that a listen. And we're going to be talking more about Deep Seek today because this company is causing a panic among investors right now. I mean, this week might end up being the most important week for the stock market. I was hyping it up last week, but there is so much going on this week.

We are getting a ton of earnings from some major companies. Boeing, GM, Starbucks, ASML, Tesla, Microsoft, Meta, and Apple are just some of the companies that are reporting earnings this week. I think the results from these earnings, especially the big tech companies, could set the tone for the rest of the market. Expectations are high right now. Investors are going to want to see strong earnings numbers, but also a strong guidance moving forward.

Personally, I think Apple and Microsoft's earnings reports are the most pivotal for this quarter. Now, if that wasn't enough to get your heart rate going, we also have a Fed meeting this week. This is the first Fed meeting under President Trump and Jerome Powell and the Fed are expected to keep rates unchanged. This is despite Trump's comments last week saying he would ask for rates to come down immediately. So I'm really curious to see how Jerome Powell navigates all this, the politics of all of it, Trump's comments. I mean, you already know that press conference on Wednesday afternoon could get pretty heated. So I can't wait for that. I mean, I'm pumped for the entire week. This week is like my Super Bowl. I'm going to bring the heat every single episode this week. So if you haven't

subscribed to the podcast, it's a great time to do so. And if you can't tell, I'm very overcaffeinated right now, and I probably will be for the rest of the week. Let's run through some headlines. And we have to start the show with Deep Seek. This Chinese AI startup is causing investors to panic right now. Tech stocks in the U.S., especially AI-related stocks, are tanking this morning because of what Deep Seek was able to pull off. In fact, there's some people saying that the golden age of AI in the U.S. could be over. That seems like a bit of an overreaction, but let's talk about what Deep Seek did for people to even have that conversation. Last week, Deep Seek released the model that seems to be on par with U.S. rivals like OpenAI

on several performance benchmarks, but they were able to pull this off at a much, much lower cost. I'm talking like 90 plus percent cheaper, and that has shocked Silicon Valley and it's rattling investors right now. Because U.S. AI companies are spending billions of dollars to build up their AI capabilities. Meta last week announced their plans to spend $65 billion in CAPEX, mostly to build up their AI capabilities. Microsoft announced their planning to spend $80 billion. You also had the $500 billion Stargate project announcement from OpenAI, Oracle, and SoftBank. So some investors are asking the question why they're spending all that money when a Chinese company was able to create an AI model that's just as good at a fraction of the cost. And that's why the markets are kind of

I'm melting today. Deep Seek has potentially rewritten the economics of AI, and it might be threatening U.S.'s dominance in the space. And what's crazy is that China was able to pull this off with one hand tied behind their back. Because remember, the U.S. has export restrictions on sending their best AI chips to China. Deep Seek was able to stockpile a ton of Nvidia H-800 chips that acquired prior to them getting banned for export, but since they weren't able to buy more, that forced the company to innovate for efficiency. And I forgot to mention, Deep Seek's model is open source. So I bet other companies are going to go in there to try to figure out what DeepSeek did to make it so efficient. So if other companies start copying Deepseek's model, that might reduce the demand for

Nvidia chips moving forward. That's why Nvidia stock is one of the hardest hit stocks this morning down more than 10% on track to have its worst day in almost five years. This is also dragging down shares of other chip makers like Broadcom and AMD. Not to mention a lot of data center and energy companies that have been writing the coattails of AI, they're also spiraling. We'll talk about some of those stocks later in the show. So yeah, this Deep Seek thing, seems to be a canon event for the AI industry, and it's causing a lot of people to ask questions of the U.S.'s dominance in the AI industry and the economics of AI. I'm sure we're going to be talking about the impact of DeepSeek over the next few days and weeks as the market's fully

taken everything that's happening. Or this might just be a little mini dip and we all forget about it two weeks from now and the markets hit all-time highs. It can go both ways. Now going from one Chinese company to another, let's talk about TikTok. Because it looks like Oracle in Microsoft or in talks to buy the company. Trump is working on a deal that would see Oracle and other investors take a majority ownership of TikTok, leaving the social media giant's parent company, bite dance with a minority stake. This is according to reporting from NPR.

Now, Oracle seems like a logical choice here because they already do business with TikTok. They help run their infrastructure, so I'm not surprised to see them being in the mix to take over TikTok. Now, other bidders are still trying to make a move for TikTok. Perplexity AI, which is an AI search engine, revise their bid, and now they're offering up to a 50% stake in TikTok

to the U.S. government. This is according to reporting from CNBC. Their proposed deal would merge Perplexity, city with TikTok, giving the AI chat box company access to a massive video platform, probably to train their AI model, and the US would get access to 50% ownership once the company reaches a $300 billion IPO. Mr. Beast is also in talks to buy TikTok, but let's not, let's not take that one seriously. Come on.

By the way, TikTok is still not available on the app store. If you look up TikTok on the Apple App Store or the Google Play store, it's not there. So they kind of have to get a deal done for it to come back. So we'll see what happens. They have under 70 days to pull this off. Let's talk about some stocks making moves today. Shares of AT&T are rising this morning after the telecom giant beat earnings for the quarter. The company's subscriber growth beat estimate as well,

driven by bundle demands for mobile and internet plans. The growth in mobile internet plans is flattening, so they were able to scoop up market share through bundles, which is giving AT&T a boost. Shares of AT&T are up more than 3% on this news. Now, on the flip side, AI infrastructure stocks are getting demolished this morning. Constellation Energy, which is the largest owner of nuclear power plants in the U.S. is one of the worst performing stocks in the S&P 500 this morning.

It's down almost 20%. Other power providers are also getting clapped this morning, shedding market cap, including Vistra and ACHLO. This is all part of the DeepSeek story, because if fewer AI chips are required to train advanced AI models, there's going to be a lot less power need. And that's why these energy companies are seeing their stock drop so much today. These companies saw their stock skyrocket last year as they signed deals with big tech companies like Microsoft and anticipation of the energy demand from AI data centers.

Now all that is up in the air. Just crazy how one app is causing a ripple effect across the markets. Let's wrap the show with a fun fact. Egg prices are going through the roof because of a bird flu that killed more than 17 million egg laying hens in the final two months of 2024. And unfortunately, it's expected to get worse. Egg prices were up 36% year over year in December, and a new estimate from the U.S. Department of Agriculture sees egg prices.

rising 20% this year, which is way ahead of the 2.2% for food prices generally. And unfortunately, the bird flu hasn't shown any mercy this month. The outbreak has caused the death of more than 8 million birds in January, according to the USDA. And as someone who eats a lot of eggs, man, I feel this one. Well, all right, guys, that's the rundown for today. What a start to the week. And there's so much more to talk about. We got earnings.

We've got the Fed meeting. We're going to be talking all of it here on the podcast. If you haven't already, make sure you guys are subscribed to the podcast. hit that notification bell if you want to be notified as soon as an episode goes up every morning. Also, it's my daughter's birthday this week as well. So I'm going to have a lot of emotions and caffeine running through my body. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes.

And we'll see you guys back here tomorrow. This is the rundown. Your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Rendown guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals, learn more at public.com disclosures.

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