UniSuper, a major Australian pension fund, has its Chief Investment Officer, Pierce, warning that breakthroughs in Artificial Intelligence (AI) from China could trigger concern among US tech giants, especially as companies betting on generative AI might see their share prices suddenly correct.
According to Bloomberg, Pierce said at the Bloomberg Investment Management Forum in Sydney on the 29th that the launch of China's large language model DeepSeek demonstrates that Chinese companies are able to develop large-scale models with performance comparable to their US counterparts, but at lower cost.
Currently, US tech stocks have hit record highs, with the market caps of Microsoft, Nvidia, and Apple all surpassing $4 trillion (16.8 trillion ringgit). However, Pierce cautions that if China can develop equally performant large models at lower cost, this will pose a major challenge to the business models of US tech companies.
He believes that risks like a "DeepSeek moment" are an "imminent threat that few are talking about."
Critics point out that AI-related stocks are severely overvalued, with many companies still at the proof-of-concept stage, while the enthusiasm of investors is reminiscent of past tech bubbles.
Nevertheless, Pierce remains optimistic about the overall market outlook, partly because developed economies' governments have ushered in an era of "continuous stimulus" since the COVID-19 pandemic. He believes this has created substantial investment opportunities in areas such as private credit, stating, "I'm quite bullish on private credit because I'm not concerned about the business cycle."