1/27/2025
By Charles Payne, CEO & Principal Analyst

Last week’s unveiling of DeepSeek-R1 the Chinese AI offering was met with lots of excitement and concern from the tech crowd, but didn’t move the needle in the stock market.

It seemed like business as usual, especially when Meta (META) announced it raised its budget on AI spending to $65 billion well above Wall Street consensus of $38 billion.

But more stories came out about this breakthrough AI product and the battle was joined between DeepSeek-R1 and ChatGPT. The Chinese company won the initial scrimmage over the weekend when it was the number one downloaded app.

I’m calling this the modern-day battle of the Ironclads also known as Battle of Hampton Roads.

Just as the unveiling of ChatGPT in November 2023 surprised the world, the release of DeepSeek-R1 has done the same.

The Chinese Artificial Intelligence (AI) product instantly received raving reviews.

In the process, it instantly became a rival to ChatGPT and may upend everything we thought we knew about the future of AI and America’s presumed dominance.

Overshadowing Stargate

While there is genuine excitement over the Stargate Project, the week's most prominent artificial intelligence story may have been the unveiling of DeepSeek-R1, China’s instant rival to ChatGPT.

Believe the Hype

One of the most knowledgeable and influential voices in Technology (XLK) immediately praised DeepSeek-R1, making it harder to dismiss the hype.

The battle is on, and I am reminded of the first clash of the ‘Ironclads.’

The Battle of Hampton Roads

On April 19, 1861, President Lincoln ordered the blockade of ports in states that seceded from the Union. On April 27, 1861, North Carolina and Virginia succeeded, resulting in the blockade of Norfolk and Richmond. The Battle of Hampton Roads was fought on March 8 and 9, 1862.

However, the war and blockade changed the urgency, prompting President Lincoln to declare an emergency plan. With a budget of $1.5 million, a panel selected three ships to be considered. One stood out for its size and turret, which stayed above water.

Pursued by the Secretary of the Navy and influential friend Cornelius Bushnell, Swedish-American inventor John Ericsson offered plans for a “floating battery impregnable to the heaviest shot or shell.”

The idea floated in Ericsson’s mind for years after being inspired by Swedish timber rafts.

The ship went from concept to fully built in 100 days and was launched on March 6, 1862, just in time to race into position and make history.

The Battle of Joined

It's hard to overstate how important it was for President Lincoln, Secretary of the Navy Gideon Welles, and other key players in this drama to recognize the urgency and take the risk.

The USS Monitor was genuinely revolutionary, and it changed the world.

I think President Trump needs to investigate this immediately.

I do not think American companies will change course and the sell-off associated with this will create buying opportunities as the goal is more than a consumer app, but AGI.

Charles Payne
Wall Street Strategies

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