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This is Andrew Peach with World Business Report here on the BBC World Service.
Good to have your company on the way.
How were so many people downloading the new AI app DeepSeek without the market seeming to notice until today when NVIDIA suffered the biggest single -day loss in U .S.
market history? Analysis on the way.
Also, a trade war between Colombia and the US is off, at least for now, but what impact would Donald Trump's tariffs have had on the Colombian economy?
And how does one of the biggest brands in the world cope with having to give its customers some bad news?
They'll have to then put a lot of effort into letting customers know that their product, which they have been advertising as something which is a desirable product, they have to say this product could be potentially damaging for you, and that's hard for a lot of brands, Let's start, though, in the world
of AI, a sector which could transform our lives beyond recognition.
I guess that's why President Trump has pledged to put the US government's financial muscle behind its own tech champions as they develop ever more sophisticated AI tools and the hard way they need to operate.
He described the investment as a show of confidence.
Together, these world leading technology giants are announcing the formation of Stargate.
So put that name down in your books.
Because I think you're going to hear a lot about it in the future.
A new American company that will invest $500 billion, at least, in AI infrastructure in the United States and very quickly moving very rapidly, creating over 100 ,000 American jobs almost immediately.
This monumental undertaking is a resounding declaration of confidence in America's potential under a new president.
Now, the AI sector has taken a massive hit.
Founder, Liang Wenfeng.
Liang Wenfeng is actually from the south, from Guangdong, but he was in Zhejiang University, that coastal province near Shanghai.
You know, he applied the AI to trade and made money and then used that money to build Deep Seek.
And it didn't exactly come out of nowhere, but it was one of many that was floating around.
But my goodness, yeah, this has really hit home very much with these inflated U .S.
valuations and sort of generally underestimating China because of political and other reasons.
And wow, I mean, Yang Wenfeng had obviously made some money.
He'd actually stockpiled some of the higher end NVIDIA chips, but also crucially matched to the sort of lower end ones that are not subject to the same sanctions.
And using software and probably access the data, he sort of put this thing together in a way that has surprised everyone.
And, you know, by the way, it's self -funded.
It's not like the government was, to our knowledge, ploughing money in.
He was received by the prime minister a few days ago.
Now we know why, because this is very strategic for China.
Now we need Lily Chimali, our North America tech correspondent on this.
Lily, start with the basics for me.
What is DeepSeek? What does it do?
Yeah, it's a great question.
It does what OpenAI's ChatGPT does.
It does what Google's Gemini does.
It basically allows you to enter a question, a prompt, and it delivers, in most cases, a comprehensive answer.
These are lengthy responses in some cases that give you the history of a particular figure or even throw some ingredients in there.
It'll tell you what to make for dinner.
We've been playing with it all day.
And we have noticed, however, that it does not give quite such comprehensive answers to questions that might have a political sensitivity to the Chinese Communist Party.
We've asked it about what happened at Tiananmen Square, for example, about Taiwan.
And there you can see it in some cases delete the beginnings of an answer and say, we can't answer that question.
We prefer to steer clear.
I'm paraphrasing there but it's it's very obvious that it doesn't respond to those more politically sensitive prompts.
Now obviously it has been noticed because so many people have been downloading it but this is the bit I don't get the markets have everything priced in and yet they didn't seem to have noticed this.
Well your previous soundbite there your previous guest noted these inflated AI valuations and that's been the talk of Silicon Valley.
Are AI buy stocks as, are they priced to perfection, as they say on Wall Street, or are they hyped up and weigh, you know, do they cost more?
Does a share of, for example, Nvidia cost more than it really should?
And based on what we've seen in the stock markets today, U .S.
markets closed a little bit more than an hour ago now.
Nvidia down 17 percent, Broadcom down 17 percent.
These are, you know, or maker of these high -powered AI chips that have formed the backbone of the industry.
We just saw Jensen Wong showing off his wares at CES, the big consumer electronics show in Las Vegas, earlier this month.
And there's been a lot of talk about, is that company too hyped up?
It doesn't mean just because it's down on this scale today that the answer is yes.
I think the question is where are we a couple days from now?
Where are we a month from now?
Markets can be very jittery and we'll see what happens.
Because NVIDIA's products are no less good than they were 24 hours ago.
So the huge market reaction is what?
They've suddenly got some competition.
Yeah, it's the real story here is the fact that what DeepSeek has been able to do is build a ChatGPT competitor at a fraction of the cost, at a fraction of the computing power of what ChatGPT requires.
And that is remarkable.
Also, at a fraction of the energy needs that we saw this route not just in tech stocks, but also in energy and utility stocks today.
So it's really upending a whole host of assumptions that we have been making about AI and what it costs to develop it.
I did speak to a prominent tech analyst, a veteran analyst today, about how he views this.
He is still pretty bullish on the AI sector, saying that he doesn't think demand for NVIDIA chips is going to slow down.
And I will note, there's been some reporting about the founder of DeepSeek, Leon Wing Fung, actually stockpiling NVIDIA chips in order to help make this happen.
So I think you're on the right track there that, you know, it's not entirely clear what this means for NVIDIA, but the chips are the same today as they were yesterday, and they will be from a month from now.
I think the demand question is really the one to focus on.
But there's no doubt that those chips that are designed by NVIDIA have played an absolutely pivotal role.
And now we're seeing there's been some restrictions on China's ability to access those chips, these export controls.
So apparently, China may have been able to get around them or may have stockpiled some of these chips beforehand.
Lily, thank you so much.
Live now to Christy Pitts, early stage investor at Backstage Capital and co -founder of Backstage Studio.
Christy, help me with this.
The US was dominant in AI and seemed to be dominant just yesterday.
Suddenly, no more. How come?
Oh, I don't know if we could say that the US is no longer dominant.
The new information about DeepSeek coming out with its model and the fact that allegedly that the development was much cheaper and faster than its comparable, which is ChatGPT 4 .0, does call into question some of the cost associated with building these models.
However, we do see in the U .S.
that particularly companies in Silicon Valley like OpenAI, but also Anthropik, Google, Microsoft are still leading the way.
And for example, one thing that we can point to is the fact that the U .S.
has more than 12 times the data centers that China has, which is critical when running models like these at scale.
So this development with DeepSeek is definitely a moment where it's showing that competition has intensified, but I don't think that we see a succession here yet.
Okay. So, I mean, some people are saying, is this the equivalent of the dot -com bubble bursting or just a market correction of some sort?
How do you read it?
Yes. So I would say this is even more so than a market correction, really just pressure in a few specific companies.
We've talked already today on the show about the pressure on NVIDIA losing almost $600 billion in value.
But that's to note that NVIDIA is still valued at $2 .9 trillion after the correction.
And to give some historical context here, in 1999, before the dotcom bust, the NASDAQ increased in value by 86 % before the ultimate correction, which happened in March of the following year.
We're not seeing anything near that in today's markets.
In 2024, NASDAQ increased on par with other exchanges, just about 30%.
And with today's news about DeepSeek and the changes to NVIDIA and other chip makers, there was a total dip of 3%.
So we are seeing some diversification in the markets that hopefully will continue to write itself and show that this is not a repeat of the dot -com bust.
Have you made investment changes of your own today because of this?
No, but I did play quite a bit with DeepSeek and I had some fun asking it questions.
I asked it to tell me a couple of jokes.
And while I thought they were a little cheesy, it is quite a competitor to what ChatGPT has in the market.
And it should serve as a wake -up call.
Christy, thank you.
Live to Peter Jankowskis now from Armour Financial Services in Chicago.
Peter, we took all the time on World Business Report about market movements.
This is quite some story today.
Yes, it is. And it's quite interesting how discriminating investors were.
You know, as much as the stories talk about technology as a whole being down, you know, you certainly had NVIDIA down, you had Broadcom down, but you had some other stocks that fared reasonably well.
Salesforce, for example, was up 4%.
Apple was up 3%. And I think the big difference is these are primarily users of AI as opposed to producers of chips, et cetera, that go into building the models.
So, like anything else, what's bad news for one type of company can turn out to be good news for another.
And also electricity companies down, this is to do with the data centers, right?
Correct, yeah. There were a couple of them, actually, that had gone up quite spectacularly as part of this bubble.
Constellation Energy was down 21 percent.
Vistro was down 28 percent.
But there were other mainstay utility companies that did not participate in that boom.
They were actually up on the day.
Southern Company was up 3 .6 percent.
Duke Energy was up 1 .4.
So again, investors were discriminating as they looked at this news and parsed it through, I think, very efficiently.
Markets are so fragile.
What happens next? Hard to say.
I think a big part of this is really verification of the deep -seep claims, particularly with regard to the need for chips and the amount of money that was spent in terms of running the model and building the model.
That's really the big driver, I think, that's been behind these sell -offs, because obviously the fewer chips you need, that impacts a company like NVIDIA, and the less computers you have to run impacts those utilities that we're expecting the increase in demand.
So it'll be interesting to see how that verification plays out here over the next few months, and that will determine whether these price levels remain consistent, we see further selling, or if it turns out that these numbers can't be verified, perhaps they'll come back.
Peter, stay with us.
This is World Business Report from the BBC.
I'm Andrew Peach. A looming trade war between the US and Colombia seems to have been averted after an argument over the deportation of migrants.
Gideon Long is in Colombia for us.
He takes up the story.
This whole spat started over the weekend when Donald Trump said that he wanted to return two plane loads of Colombian migrants from the United States back to Colombia.
And the key thing is he said he wanted to send them in military planes.
And the government in Colombia, led by the left -wing president Gustavo Petro, said that it had no objection to the migrants coming back to Colombia, but that it didn't want them sent in military planes.
It said that that was treating them like criminals and that it lacked dignity and respect.
So that was the start of the spat.
Trump responded to that by saying he would impose 25 % tariffs on Colombian goods coming into the United States.
And he said that if there was no cooperation from the Colombian government, that that would be raised to 50 % in a week's time.
Gustavo Petro responded again.
This was all on social media on Sunday, saying that Colombia would impose 25 % tariffs on U .S.
goods coming into Colombia.
So that was all on Sunday.
And then on Sunday evening, there was a statement from the White House in which the White House said that Colombia had essentially given in to all of the U .S.
demands and that it had accepted that the migrants would be sent back to Colombia.
So for now, at least, the dispute seems to have been diffused.
But the Trump administration has said that it still might use those tariffs if it doesn't feel the Colombian government is cooperating fully.
So that was over the weekend.
end. It was about terrorists, but actually at its root, this dispute was about migration and the return of migrants to Latin America, and it certainly got people in Colombia talking about their country's relationship with the United States.
On Saturday, I was in the capital Bogota, and I spoke to one woman about how she expected that relationship to look over the next four years.
Hola, mi nombre es Gloria Marcela Rubino.
Hello, my name is Gloria Marcela Rubino.
I am 45 years old. I live in Colombia, Bogotá, at the moment I am unemployed.
Obviously, all the migrants are going to be deported and there will be no opportunities, because if they go to the United States, the visa will be much more difficult.
So it is difficult for all migrants from Latin America and therefore from Colombia.
On the other hand, I also find Trump is right about the issue of migrants because of labor issues.
It happens to us in Colombia.
With all the migrants we have from abroad, the majority of Venezuelans...
...might use those tariffs if it doesn't feel the Colombian government is cooperating fully.
So that was over the weekend.
It was about tariffs, but actually at its root, this dispute was about migration and the return of migrants to Latin America.
And it's certainly got people in Colombia talking about their country's relationship with the United States.
On Saturday, I was in the capital, Bogotá, and I spoke to one woman about how she expected that relationship to look over the next four years.
Hola, mi nombre es Gloria Marcella Rubiano.
Hello, my name is Gloria Marcella Rubino.
I am 45 years old. I live in Colombia, Bogotá.
At the moment, I am unemployed.
Obviously, all the migrants are going to be deported and there will be no opportunities because if they go to the United States, The visa will be much more difficult.
So it is difficult for all migrants from Latin America and therefore from Colombia.
On the other hand, I also find Trump is right about the issue of migrants because of labor issues.
It happens to us in Colombia.
With all the migrants we have from abroad, the majority of Venezuelans take away many job opportunities from us.
Since they work for less and then the businessmen prefer foreigners, Well, that is good for the businessman.
But for us, the people, well, the fact is that ordinary people are unemployed and it is difficult.
A report from Gideon Long in Bogota.
Maria Claudia Lacouture is head of the Colombo American Chamber of Commerce.
Maria, thank you so much for being with us on World Business Report.
Is everyone breathing a sigh of relief that this tariff never really happened?
Definitely. And I believe that this is something that has to be managed, analyzed and think through in order to make possible that the tension that will continue, because definitely we will continue to have tension between the region with the United States.
But we have to be pragmatic.
We have to work together because there are opportunities that we can develop in order to make possible for the Colombians to have opportunities based on the relation with the United States.
What would the impact have been, do you think, of 25 % and then 50 % tariffs on the Colombian economy?
This goes beyond numbers.
It's not a simple exchange of goods or services.
The relation between Colombia and the U .S.
is a 200 years relation.
And it is such a alliance that drives employment, investment in 1%.
It's more than $13 billion of exports.
And you can move that to products, for example, coffee.
We have 530 families that depend on the production of coffee.
39 % of our coffee goes to the United States.
So, it's not only a sense of figures, it goes beyond that, it's the security and the well -being of Colombia.
We move to flowers.
Flowers is one of the key products for now in February as San Valentin is coming forward.
And the 79 % of our product in flower goes to the United States.
It's more than 200 ,000 direct employment that depends on this.
Okay, let me just pause you for a second or two.
So we've got coffee, we've got flowers, just as examples of important parts of the economy in Colombia.
Is there any way you can protect it?
Because as you say, the relationship isn't fixed.
There's every chance that in a few days or weeks or months the tariffs will be threatened again or introduced.
So is there anything that can be done to protect the businesses you're talking about?
Actually, this tension should not be happening, I believe, because what we have done in the previous years and many years is how we can work together with the United States in order to facilitate and improve our opportunities in the U .S.
and the U .S. in Colombia.
So how can we protect is through a trade agreement that we do have.
There are certain areas that you can revise the trade agreement.
There are areas that you can work together through the channels, diplomatic channels, that you can work with the United state, and also is how we did to release the tension yesterday, that is through the business community.
One of the things that we learned through this tension is that the relation between the two countries goes beyond the president.
It has also the business community, the Congress and society that are beyond this and they are fighting in order to maintain a good relation and that was part of the success that we have here today.
It's very interesting.
Thank you very much, indeed, Maria.
Maria Claudia La Couture from the Chamber of Commerce, affected by that.
Peter Jankowskis, Vice President of Research and Analysis at Arbor Financial Services in Chicago, is still with me on World Business Report.
Any market reaction to the row between Donald Trump and Colombia, or is it just all dwarfed by what else has been going on?
I think it's largely been today.
So overall, I would say the market sees this as being smoothed over and not too much of a lasting impact.
Peter, thank you very much for that.
Peter Jankowskis with us on World Business Report today.
Now, let's talk about Coca -Cola.
Their European bottling unit has recalled several drinks, including Coke, Sprite and Fanta because of high chlorate levels.
This recall affecting cans and bottles sold in Belgium, the Netherlands, Germany, France, the UK and Luxembourg since the end of November.
I've been talking to Eddie Hammerman who's a brand expert and managing director of the 10 Group about how a crisis like this can impact such a big brand.
It sounds like in this case they discovered the issue which I think they're in a better position because they're in more control of the narrative and they can therefore be on the front foot.
There are other cases where they could be alerted by third party.
And in that case, if the news gets out before they have a considered response, then that could be more of an issue.
But they will have a plan in place for things like this.
I would say that brands globally, product recalls happen all the time.
In most cases, they are not damaging to the customer, but sometimes they are.
In this case, Coca -Cola says it doesn't sound like there's a serious health issue, but clearly it's not a good thing for them and there will be some reputational damage but there are certain things that brands can do in cases like this where they can minimize the reputational damage they can they need
to really rebuild that consumer confidence and they could ultimately emerge stronger if they do it right so this really interesting so first of all it might be that the issue is picked up by the company's own processes which seems to have happened here it might be that it's flagged by a consumer which is more
difficult. What does the machinery of an enormous organisation like Coca -Cola then do?
Before it starts thinking about its reputation, what does it do to actually identify exactly where the issue is, and how to stop it getting any worse?
So I think in many different cases, but I think you've highlighted the fact that the first step is make sure that the issue is fixed.
The first thing you need to do before, even before you go as highlight to the regulators there'll be a regulatory process but also then clear comms and that needs to be open transparent clear which it sounds like they're doing now and it's not easy I mean I'm looking at the they've issued a batch codes
I don't know if as a consumer you've ever looked at the codes on a product of a can of anything or what does it do to actually identify exactly where the issue is and how to stop it getting any worse?
So I think in many different cases, but I think you've highlighted the fact that the first step is make sure that the issue is fixed.
The first thing you need to do even before you go out is highlight to the regulators, there'll be a regulatory process, but also then clear comms, and that needs to be open, transparent, clear, which it sounds like they're doing now, and it's not easy.
I mean, I'm looking at the, they've issued a batch codes.
I don't know if as a consumer you've ever looked at the codes on a product of a can of anything or food.
They're usually not, but I suppose they're there.
No, exactly. They're there for a reason.
But most consumers don't have a look at the batch codes.
I imagine if it went to a distributor, they would know what to look for and they could highlight them.
But for most consumers, it's not easy.
They might not even know they're consuming the product what they will have to do next is prioritize the consumer safety that's the first thing they will do regulatory there's an issue but also they'll lose trust if they don't and they need to prove that the issue is fixed they need to show that they're
taking that responsibility they can't blame anyone else sometimes in these situations there might be a third party involved no one cares right coca -cola in this case have got a product out that there is a clear issue with and other products will be out there from other brands.
And even if it's not their fault, and even if it's a third party would need to take responsibility and they need to fix it.
I guess the big impact on the business is presumably, I mean, I've just walked down the street here in London and there are Coca -Cola products still on sale everywhere.
I guess the problem is that people might be reluctant to buy them.
They might think, well, are those the ones that are supposed to have been taken off the shelves?
Yeah, and it's difficult for brands because they'll have to then put a lot of effort and money into letting customers know that their product, which they had been advertising as something which is a desirable product, they then have to do the exact opposite.
They have to say, this product could be potentially damaging for you.
And that's hard for a lot of brands because they know they'll take that financial hit.
But that's exactly what they're going to have to do.
They'll have to take a short -term hit on this for a long -term brand gain.
Okay. And the fact that it's Coca -Cola or something of that magnitude makes it bigger news as well so everyone knows about it yeah and like i say brand recalls happen every single day and if you walk into a local supermarket there'll be a sign on the wall which you probably won't notice but we probably
should do that will say these products are being recalled for this
