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Artificial Intelligence

Everyone is freaking out over DeepSeek. Here’s why

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From The Deep View

$600 billion collapse

Volatility is kind of a given when it comes to Wall Street’s tech sector. It doesn’t take much to send things soaring; it likewise doesn’t take much to set off a downward spiral.
After months of soaring, Monday marked the possible beginning of a spiral, and a Chinese company seems to be at the center of it.
Alright, what’s going on: A week ago, Chinese tech firm DeepSeek launched R1, a so-called reasoning model, that, according to DeepSeek, has reached technical parity with OpenAI’s o1 across a few benchmarks. But, unlike its American competition, DeepSeek open-sourced R1 under an MIT license, making it significantly cheaper and more accessible than any of the closed models coming from U.S. tech giants.
  • But the real punchline here doesn’t have to do with R1 at all, but with a previous language model — called V3 — that DeepSeek released in December. DeepSeek was reportedly able to train V3 using a small collection of older Nvidia chips (about 2,000 H800s) at a cost of about $5.6 million.
  • Still, training is only one cost of many tied to AI development/deployment; while the costs associated with researching, developing, training and operating both R1 and V3 remain either unknown or unconfirmed, DeepSeek’s apparent ability to reach technical parity at a far reduced cost, without state-of-the-art GPU chips or massive GPU clusters, has a lot of implications for America’s now tenuous position in AI leadership. (Though DeepSeek says it is open-sourced, the company did not release its training data).
Since the release of R1, DeepSeek has become the top free app in Apple’s App Store, bumping ChatGPT to the number two slot. In the midst of its spiking popularity, DeepSeek restricted new sign-ups due to large-scale cyberattacks against its servers. And, as Salesforce Chief Marc Benioff noted, “no Nvidia supercomputers or $100M needed,” a point that the market heard loud and clear. 
What happened: Led by Nvidia, a series of tech and chip stocks, in addition to the three major stock indices, fell hard in pre-market trading early Monday morning. All told, $1.1 trillion of U.S. market cap was erased within a half hour of the opening bell.
  • Performance didn’t get better throughout the day. Nvidia closed Monday down 17%, erasing some $600 billion in market capitalization, a Wall Street record. TSMC was down 14%, Arm was down 11%, Broadcom was down 17%, Google was down 4% and Microsoft was down 2%. The S&P fell 1.4% and the Nasdaq fell 3.3%. An Nvidia spokesperson called R1 an “excellent AI advancement.”
  • This is all going into a week of Big Tech earnings, where Microsoft and Meta will be held to account for the billions of dollars ($80 billion and $65 billion, respectively) they plan to spend on AI infrastructure in 2025, a cost that Wall Street no longer seems to feel quite so good about.
It’s hard to miss the political tensions underlying all of this. The tail end of former President Joe Biden’s time in office was marked in part by an increasingly tense trade war with China, wherein both countries issued bans on the export of materials needed to build advanced AI chips. And with President Trump hell-bent on maintaining American leadership in AI, and despite the chip restrictions that are in place, Chinese companies seem to be turning hardware challenges into a motivation for innovation that challenges the American lead, something they seem keen to drive home.
R1, for instance, was announced at around the same time as OpenAI’s $500 billion Project Stargate, two impactfully divergent approaches.
What’s happening here is that the market has finally come around to the idea that maybe the cost of AI development (hundreds of billions of dollars annually) is too high, a recognition “that the winners in AI will be the most innovative companies, not just those with the most GPUs,” according to Writer CTA Waseem Alshikh. “Brute-forcing AI with GPUs is no longer a viable strategy.”
Wedbush analyst Dan Ives, however, thinks this is just a good time to buy into Nvidia — Nvidia and the rest are building infrastructure that, he argues, China will not be able to compete with in the long run. “Launching a competitive LLM model for consumer use cases is one thing,” Ives wrote. “Launching broader AI infrastructure is a whole other ballgame.”
“I view cost reduction as a good thing. I’m of the belief that if you’re freeing up compute capacity, it likely gets absorbed — we’re going to need innovations like this,” Bernstein semiconductor analyst Stacy Rasgon told Yahoo Finance. “I understand why all the panic is going on. I don’t think DeepSeek is doomsday for AI infrastructure.”
Somewhat relatedly, Perplexity has already added DeepSeek’s R1 model to its AI search engine. And DeepSeek on Monday launched another model, one capable of competitive image generation.
Last week, I said that R1 should be enough to make OpenAI a little nervous. This anxiety spread way quicker than I anticipated; DeepSeek spent Monday dominating headlines at every publication I came across, setting off a debate and panic that has spread far beyond the tech and AI community.
Some are concerned about the national security implications of China’s AI capabilities. Some are concerned about the AI trade. Granted, there are more unknowns here than knowns; we do not know the details of DeepSeek’s costs or technical setup (and the costs are likely way higher than they seem). But this does read like a turning point in the AI race.
In January, we talked about reversion to the mean. Right now, it’s too early to tell how long-term the market impacts of DeepSeek will be. But, if Nvidia and the rest fall hard and stay down — or drop lower — through earnings season, one might argue that the bubble has begun to burst. As a part of this, watch model pricing closely; OpenAI may well be forced to bring down the costs of its models to remain competitive.
At the very least, DeepSeek appears to be evidence that scaling is one, not a law, and two, not the only (or best) way to develop more advanced AI models, something that rains heavily on OpenAI and co.’s parade since it runs contrary to everything OpenAI’s been saying for months. Funnily, it actually seems like good news for the science of AI, possibly lighting a path toward systems that are less resource-intensive (which is much needed!)
It’s yet another example of the science and the business of AI not being on the same page.

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Artificial Intelligence

AI is accelerating the porn crisis as kids create, consume explicit deepfake images of classmates

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From LifeSiteNews

By Jonathon Van Maren

“Ten years ago it was sexting and nudes causing havoc in classrooms,” writes Sally Weale in a chilling new report at the Guardian. “Today, advances in artificial intelligence (AI) have made it child’s play to generate deepfake nude images or videos, featuring what appear to be your friends, your classmates, even your teachers. This may involve removing clothes, getting an image to move suggestively or pasting someone’s head on to a pornographic image.”

I have been covering the rise of the next horrific manifestation of our collective porn crisis here at LifeSiteNews since 2019, when I warned that the rise of “deepfakes” would inevitably result in people making artificial pornography of their peers. Just a few years later, I reported on stories of middle-schoolers making deepfake pornography of kids they attended class with; last year, I reported on the rise of “nudify” apps that can digitally undress people in photographs, and the trauma, bullying, and inevitable sexual blackmail that has resulted.

The Guardian report reveals how swiftly this crisis is escalating. One teacher described an incident in which a teenage boy took out his phone, chose a social media image of a girl from a neighboring school, and used the “nudify” app to digitally remove her clothes. The teacher was shocked to see that the boy wasn’t even hiding his actions, because he didn’t see what he was doing as shocking, or even shameful. “It worries me that it’s so normalized,” she said. Other students reported the boy, his parents were contacted, and the police were called. The victimized girl was not even told.

The crisis is global. “In Spain last year, 15 boys in the south-western region of Extremadura were sentenced to a year’s probation after being convicted of using AI to produce fake naked images of their female schoolmates, which they shared on WhatsApp groups,” Weale writes. “About 20 girls were affected, most of them aged 14, while the youngest was 11.”

A similar situation unfolded in Australia, where 50 high school students had deepfake images distributed; in the United States, 30 female students in New Jersey discovered that “pornographic images of them had been shared among their male classmates on Snapchat.”

The mother of one student in Australia said that “her daughter was so horrified by the sexually explicit images that she vomited.” In the United Kingdom, the problem has exploded overnight:

A new poll of 4,300 secondary school teachers in England, carried out by Teacher Tapp on behalf of the Guardian, found that about one in 10 were aware of students at their school creating “deepfake, sexually explicit videos” in the last academic year. Three-quarters of these incidents involved children aged 14 or younger, while one in 10 incidents involved 11-year-olds, and 3% were younger still, illustrating just how easy the technology is to access and use. Among participating teachers, 7% said they were aware of a single incident, and 1% said it had happened twice, while a similar proportion said it had happened three times or more in the last academic year. Earlier this year, a Girlguiding survey found that one in four respondents aged 13 to 18 had seen a sexually explicit deepfake image of a celebrity, a friend, a teacher or themselves.

Predictably, teachers are also being targeted. Girls and women are left shattered by this victimization. Laura Bates, author of The New Age of Sexism: How the AI Revolution Is Reinventing Misogyny, writes: “It feels like someone has taken you and done something to you and there is nothing you can do about it. Watching a video of yourself being violated without your consent is an almost out-of-body experience.” Boys, meanwhile, are engaging in criminal behavior often without even knowing it. In the world they have grown up in, pornography is normal – and this is merely the next step.

The experts that Weale interviews are, as usual, at a loss of what can be done about this crisis. They emphasize education, while admitting that this is the equivalent of taking a water pistol to a raging forest fire. They are skeptical that guidelines or bans around technology at school will help. Understandably, educators are demoralized and even despairing. Pornography and sexting have already transformed schools. Deepfake pornography is now making an already ugly crisis far more personal, and there is no indication that the problem can be stopped without dramatic action.

The good news is that the first step in this direction has already been taken in the U.K. On November 3, the government  tabled the Crime and Policing Bill in Parliament. It includes an amendment criminalizing pornography featuring strangulation or suffocation – usually referred to as “choking” – with legal requirements for tech platforms to block this content from U.K. users.

This is the first time a genre of pornography has been criminalized on the basis that even if it is consensual, it genuinely harms society. That is an encouraging precedent, because it applies to virtually all hardcore pornography – and certainly to the “nudification” apps that are set to make middle school a hyper-sexualized hell for women and girls.

The porn industry is destroying society. We must destroy it first.

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Jonathon’s writings have been translated into more than six languages and in addition to LifeSiteNews, has been published in the National PostNational ReviewFirst Things, The Federalist, The American Conservative, The Stream, the Jewish Independent, the Hamilton SpectatorReformed Perspective Magazine, and LifeNews, among others. He is a contributing editor to The European Conservative.

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Artificial Intelligence

The Emptiness Inside: Why Large Language Models Can’t Think – and Never Will

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By Gleb Lisikh

Early attempts at artificial intelligence (AI) were ridiculed for giving answers that were confident, wrong and often surreal – the intellectual equivalent of asking a drunken parrot to explain Kant. But modern AIs based on large language models (LLMs) are so polished, articulate and eerily competent at generating answers that many people assume they can know and, even
better, can independently reason their way to knowing.

This confidence is misplaced. LLMs like ChatGPT or Grok don’t think. They are supercharged autocomplete engines. You type a prompt; they predict the next word, then the next, based only on patterns in the trillions of words they were trained on. No rules, no logic – just statistical guessing dressed up in conversation. As a result, LLMs have no idea whether a sentence is true or false or even sane; they only “know” whether it sounds like sentences they’ve seen before. That’s why they often confidently make things up: court cases, historical events, or physics explanations that are pure fiction. The AI world calls such outputs
“hallucinations”.

But because the LLM’s speech is fluent, users instinctively project self-understanding onto the model, triggered by the same human “trust circuits” we use for spotting intelligence. But it is fallacious reasoning, a bit like hearing someone speak perfect French and assuming they must also be an excellent judge of wine, fashion and philosophy. We confuse style for substance and
we anthropomorphize the speaker. That in turn tempts us into two mythical narratives: Myth 1: “If we just scale up the models and give them more ‘juice’ then true reasoning will eventually emerge.”

Bigger LLMs do get smoother and more impressive. But their core trick – word prediction – never changes. It’s still mimicry, not understanding. One assumes intelligence will magically emerge from quantity, as though making tires bigger and spinning them faster will eventually make a car fly. But the obstacle is architectural, not scalar: you can make the mimicry more
convincing (make a car jump off a ramp), but you don’t convert a pattern predictor into a truth-seeker by scaling it up. You merely get better camouflage and, studies have shown, even less fidelity to fact.

Myth 2: “Who cares how AI does it? If it yields truth, that’s all that matters. The ultimate arbiter of truth is reality – so cope!”

This one is especially dangerous as it stomps on epistemology wearing concrete boots. It effectively claims that the seeming reliability of LLM’s mundane knowledge should be extended to trusting the opaque methods through which it is obtained. But truth has rules. For example, a conclusion only becomes epistemically trustworthy when reached through either: 1) deductive reasoning (conclusions that must be true if the premises are true); or 2) empirical verification (observations of the real world that confirm or disconfirm claims).

LLMs do neither of these. They cannot deduce because their architecture doesn’t implement logical inference. They don’t manipulate premises and reach conclusions, and they are clueless about causality. They also cannot empirically verify anything because they have no access to reality: they can’t check weather or observe social interactions.

Attempting to overcome these structural obstacles, AI developers bolt external tools like calculators, databases and retrieval systems onto an LLM system. Such ostensible truth-seeking mechanisms improve outputs but do not fix the underlying architecture.

The “flying car” salesmen, peddling various accomplishments like IQ test scores, claim that today’s LLMs show superhuman intelligence. In reality, LLM IQ tests violate every rule for conducting intelligence tests, making them a human-prompt engineering skills competition rather than a valid assessment of machine smartness.

Efforts to make LLMs “truth-seeking” by brainwashing them to align with their trainer’s preferences through mechanisms like RLHF miss the point. Those attempts to fix bias only make waves in a structure that cannot support genuine reasoning. This regularly reveals itself through flops like xAI Grok’s MechaHitler bravado or Google Gemini’s representing America’s  Founding Fathers as a lineup of “racialized” gentlemen.

Other approaches exist, though, that strive to create an AI architecture enabling authentic thinking:

 Symbolic AI: uses explicit logical rules; strong on defined problems, weak on ambiguity;
 Causal AI: learns cause-and-effect relationships and can answer “what if” questions;
 Neuro-symbolic AI: combines neural prediction with logical reasoning; and
 Agentic AI: acts with the goal in mind, receives feedback and improves through trial-and-error.

Unfortunately, the current progress in AI relies almost entirely on scaling LLMs. And the alternative approaches receive far less funding and attention – the good old “follow the money” principle. Meanwhile, the loudest “AI” in the room is just a very expensive parrot.

LLMs, nevertheless, are astonishing achievements of engineering and wonderful tools useful for many tasks. I will have far more on their uses in my next column. The crucial thing for users to remember, though, is that all LLMs are and will always remain linguistic pattern engines, not epistemic agents.

The hype that LLMs are on the brink of “true intelligence” mistakes fluency for thought. Real thinking requires understanding the physical world, persistent memory, reasoning and planning that LLMs handle only primitively or not all – a design fact that is non-controversial among AI insiders. Treat LLMs as useful thought-provoking tools, never as trustworthy sources. And stop waiting for the parrot to start doing philosophy. It never will.

The original, full-length version of this article was recently published as Part I of a two-part series in C2C Journal. Part II can be read here.

Gleb Lisikh is a researcher and IT management professional, and a father of three children, who lives in Vaughan, Ontario and grew up in various parts of the Soviet Union.

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