The sudden emergence of Chinese company DeepSeek has sent US stocks tumbling and thrown the future of the artificial intelligence race up in the air. But what implications could it have closer to home? Phil Gripton, Partner at expert global growth and M&A advisory firm Waypoint, explores the transformative potential of DeepSeek and its impact on the Northern tech and agency landscape.
DeepSeek can further democratise the use of AI
DeepSeek represents a significant evolution in AI development, offering a more efficient and cost-effective approach compared to existing models.
This breakthrough has the potential to democratise AI further, making the efficiency benefits offered by the advanced technology accessible to smaller players bringing innovation beyond the confines of large, resource-rich organisations.
For the Northern agency and tech scene, DeepSeek’s impact could be material.
The North has long been a powerhouse of creativity and technological innovation, and the introduction of further accessible AI tools can further bolster this reputation.
By integrating AI into their workflows, Northern agencies can enhance their service offerings, improve client outcomes, allowing them to compete on a national and international basis with the larger networks and tech companies.
The advantage of business scale is likely to be diminished when these tools are leveraged properly by the smaller independent players.
Cost-effective DeepSeek opens the door to faster innovation
The cost-effective nature of DeepSeek’s models creates opportunities for Northern tech firms to reduce their operational expenses and accelerate innovation.
By lowering the financial barriers to AI adoption, these businesses can allocate resources to other critical areas such as research and development, thereby speeding up the innovation cycle.
Investors will look more favourably on AI-focused companies
Once the furore surrounding the announcement and the cost-effective benefit has bedded in this is likely to positively influence investor sentiment toward AI-focused companies who can translate the benefits from it for their customers.
Investors are always on the lookout for opportunities where high returns can be delivered with lower risks and the fact that smaller businesses will be able to take those advantages more easily will facilitate more of those kinds of opportunities.
At the agency level, more delivered client value from less cost is likely to drive increased margin opportunities which will inevitably drive better valuations.
Firms should re-evaluate their reliance on Western AI infrastructure
Bearing the above in mind, Northern firms would do well to re-evaluate their reliance on Western AI infrastructure.
By diversifying their AI toolsets and incorporating open-source models, these businesses can mitigate risks associated with dependency on a single source and enhance their operational resilience.
This is an exciting announcement and feels like an opportunity as disruptive technology is itself disrupted and improved upon.