WESTERN PERSPECTIVE

Ukraine mounts big drone attack, says it hit Russian refinery

Ukraine said on Wednesday it had struck a big Russian oil refinery in an overnight drone attack, and a Russian official said an attempted Ukrainian drone strike on a nuclear power plant had been thwarted.

The Ukrainian military said the strike on the refinery in Russia's Nizhny Novgorod region had caused a large fire. Reuters was able to verify a video posted on social media that showed orange flames lighting up the night sky in the city of Kstovo, but could not confirm it was the refinery that was burning.

Lukoil's NORSI refinery, Russia's fourth largest, is based in Kstovo, which lies east of Moscow and about 800 km (500 miles) from the Ukrainian border.

Russian petrochemicals giant Sibur said it had temporarily suspended operations at its plant, also in Kstovo, on Wednesday morning after debris from a Ukrainian drone sparked a fire. It said the blaze was later contained, and there were no casualties.

Ukraine has carried out frequent air attacks on Russian refineries, oil depots and industrial sites in an attempt to cripple key infrastructure underpinning Russia's war effort.

Russia is currently feeding more crude oil through its refineries in the hope of boosting fuel exports after new U.S. sanctions on Russian tankers and traders made exports of unprocessed crude more difficult, sources told Reuters this week. A Ukrainian drone attack last week forced a refinery in Ryazan, southeast of Moscow, to suspend operations.

NUCLEAR PLANT

The governor of Russia's western Smolensk region said on Wednesday that air defence systems had destroyed a drone attempting to strike a nuclear power plant there. The plant was working normally, the RIA state news agency reported, citing its press service.

Reuters could not independently verify the report.

The governor of Belgorod, another western region, said a mother and her two-year-old child had been killed when a drone struck a family home there. He said the child's father and another child had been wounded and taken to hospital.

Both sides deny targeting civilians in their attacks in the war that Russia launched in February 2022. But thousands of civilians, mostly Ukrainians, have been killed.

Russia's Defence Ministry said on Telegram that 104 Ukrainian drones had been involved in raids across western Russia, 11 of which were destroyed over the Smolensk region.

In total, Russian air defences destroyed drones over nine regions, nearly half of them over Kursk, where Russian forces are fighting to drive out Ukrainian troops who fought their way across the border last August.

RUSSIAN PERSPECTIVE

Russian troops liberate Novoyelizavetovka community in Donbass region over past day

Russian troops liberated the community of Novoyelizavetovka in the Donbass region over the past day in the special military operation in Ukraine, Russia’s Defense Ministry reported on Wednesday.

"Battlegroup Center liberated the settlement of Novoyelizavetovka in the Donetsk People’s Republic through active operations," the ministry said in a statement.

Russia’s Battlegroup North inflicts 30 casualties on Ukrainian army in Kharkov area

Russia’s Battlegroup North inflicted roughly 30 casualties on Ukrainian troops and destroyed two enemy artillery guns in its area of responsibility in the Kharkov Region over the past day, the ministry reported.

"Battlegroup North units operating in the Kharkov direction inflicted casualties on formations of a motorized infantry and an assault brigade of the Ukrainian army in areas near the settlements of Liptsy and Volchansk in the Kharkov Region," the ministry said.

The Ukrainian army lost an estimated 30 personnel, an armored combat vehicle, a motor vehicle and two field artillery guns in that frontline area over the past 24 hours, it specified.

Russia’s Battlegroup West inflicts 320 casualties on Ukrainian army over past day

Russia’s Battlegroup West inflicted roughly 320 casualties on Ukrainian troops and destroyed three enemy ammunition depots in its area of responsibility over the past day, the ministry reported.

"Battlegroup West units improved their tactical position and inflicted damage on manpower and equipment of a tank brigade, a mechanized brigade and an assault brigade of the Ukrainian army and a National Guard brigade near the settlements of Topoli, Lozovaya and Zelyony Gai in the Kharkov Region and Grigorovka in the Donetsk People’s Republic," the ministry said.

The Ukrainian army’s losses in that frontline area over the past 24 hours amounted to 320 personnel, a tank, three armored combat vehicles, including two US-made M113 armored personnel carriers, eight motor vehicles and six field artillery guns, among them two Western-made weapons, it specified.

In addition, Russian forces destroyed two Nota electronic warfare stations and three ammunition depots of the Ukrainian army over the past 24 hours, it said.

Russia’s Battlegroup South inflicts 220 casualties on Ukrainian army over past day

Russia’s Battlegroup South inflicted roughly 220 casualties on Ukrainian troops and destroyed three enemy armored vehicles in its area of responsibility over the past day, the ministry reported.

"Battlegroup South units took better lines and positions and inflicted losses on formations of two mechanized brigades of the Ukrainian army and two territorial defense brigades in areas near the settlements of Verkhnekamenskoye, Yantarnoye, Orekhovo-Vasilevka and Chasov Yar in the Donetsk People’s Republic," the ministry said.

The Ukrainian army lost an estimated 220 personnel, three armored combat vehicles, five motor vehicles and two field artillery guns in that frontline area over the past 24 hours, it specified.

Russia’s Battlegroup Center inflicts 520 casualties on Ukrainian army over past day

Russia’s Battlegroup Center inflicted roughly 520 casualties on Ukrainian troops and destroyed a US-made jamming station in its area of responsibility over the past day, the ministry reported.

During the last 24-hour period, Battlegroup Center units "inflicted damage on manpower and equipment of three mechanized and a jaeger brigade of the Ukrainian army and a National Guard brigade in areas near the settlements of Andreyevka, Novopavlovka, Udachnoye, Shcherbinovka and Tarasovka in the Donetsk People’s Republic," the ministry said.

The Ukrainian army’s losses in that frontline area over the past 24 hours amounted to 520 personnel, a tank, seven armored combat vehicles, including two US-made M113 armored personnel carriers, seven motor vehicles, five field artillery guns and a US-manufactured AN/TPQ-37 counterbattery radar station, it specified.

Russia’s Battlegroup East inflicts over 135 casualties on Ukrainian army in past day

Russia’s Battlegroup East inflicted more than 135 casualties on Ukrainian troops and destroyed four enemy artillery guns in its area of responsibility over the past day, the ministry reported.

"Battlegroup East units kept advancing deep into the enemy’s defenses and inflicted casualties on formations of a mechanized brigade of the Ukrainian army, a marine infantry brigade and a territorial defense brigade in areas near the settlements of Razliv and Konstantinopol in the Donetsk People’s Republic," the ministry said.

The Ukrainian army’s losses in that frontline area over the past 24 hours amounted to more than 135 personnel, a tank and four field artillery guns, including a Western-made weapon, it specified.

Reuters/Tass

I’ve always been told to ask a couple questions at the end of job interviews: What does a typical day look like in this position? What kinds of challenges does someone in this role typically face?
But nobody’s ever told me how to find out what kind of boss I’d be working for. A job interview should help you vet your potential employer and manager just as much as they’re vetting you — and one question can help you get a pretty good idea, says Deepali Vyas, the global head of fintech, payments and crypto practice at Korn Ferry.
The question: How would your current team describe you and your leadership style?
Use it to see if your future manager is flexible and trusting with their reports, and whether they micromanage, Vyas says. Her example of a good response: I give them enough leash to let them run with an idea, and I help them when they’re actually in need.
If your interviewer displays “green flag” leadership traits like empathy, transparency, emotional intelligence and accountability, you might enjoy working for them someday. It matters: A bad boss can quickly turn even a well-paid dream job into a nightmare.
If they respond that “people follow my lead or do what I say,” Vyas says, “those are red flags.”

CNBC

The Debt Management Office (DMO) has successfully raised N669.94 billion in its January 2025 Federal Government of Nigeria (FGN) bond auction, with N606.46 billion allotted across three different bond tenors.

According to the results posted by DMO on X (formerly Twitter), the allocations were distributed as follows:

- 19.30% FGN APR 2029: N78.86 billion at 21.79% yield

- 18.50% FGN FEB 2031: N159.29 billion at 22.5% yield

- 22.60% FGN JAN 2035: N368.31 billion at 22.6% yield

The auction, which initially targeted N450 billion, was oversubscribed with strong investor interest across all tenors. The funds raised are intended to support government infrastructure projects and help finance the 2025 budget deficit through domestic borrowing.​​​​​​​​​​​​​​​​

Nigerian telecommunications subscribers are taking legal action against the Nigerian Communications Commission (NCC) over its recent approval of a 50% increase in call and data tariffs, following failed attempts at negotiation.

The National Association of Telecommunications Subscribers (NATCOMS), representing 157 million users, announced Tuesday its plans to file a lawsuit after the NCC failed to respond to their proposal to reduce the hike to 10%. The association had given the regulator a three-day window to reconsider its position.

"Since we have not received any response, we are moving forward with the court process starting Wednesday," said NATCOMS President Adeolu Ogunbanjo. He emphasized that the steep increase particularly burdens lower-income subscribers who depend on affordable communication services.

The Socio-Economic Rights and Accountability Project (SERAP) has already filed suit FHC/ABJ/CS/111/2025 at the Federal High Court in Abuja, challenging President Tinubu's government. SERAP argues that the tariff hike is "arbitrary, unconstitutional, unlawful, unfair, and unreasonable" and seeks an interim injunction to halt its implementation.

The increase, announced last week Monday and set to take effect in February, marks the first such adjustment in over a decade. While telecom operators defend the hike as necessary for business sustainability and infrastructure expansion, critics including NATCOMS, SERAP, and the Nigeria Labour Congress argue it compounds economic hardships amid rising inflation.

Industry analysts note that despite the planned increase, telecom companies continue to face challenges from volatile exchange rates, affecting their ability to make long-term investments and manage operational costs effectively.

The NCC's Director of Publicity, Reuben Mouka, has not responded to requests for comment on the developing situation.​​​​​​​​​​​​​​​​

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has issued 10 Gas Distribution Licences (GDLs) to six companies as part of efforts to expand and deepen gas utilisation in Nigeria.

The GDL, as outlined in Sections 148–152 of the Petroleum Industry Act (PIA), grants exclusive rights to establish, construct, and operate gas distribution systems within designated Local Gas Distribution Zones (GDZs). The recipients of these licences include NNPC Gas Marketing Company, Shell Nigeria Gas Limited, NIPCO Plc., Central Horizon Gas Company, Falcon Corporation Ltd., and AXXELA.

At the award ceremony in Abuja on Tuesday, Farouk Ahmed, Chief Executive Officer (CEO) of NMDPRA, revealed that over 30 applications were submitted, and a thorough evaluation process was conducted in line with regulatory requirements.

“The licences being issued today will support the ‘last mile’ expansion, which is crucial for establishing a fully interconnected and efficient gas network across the country,” Ahmed said.

He added that the issuance of these 10 licences marks the first phase of the GDL regime, with further licences to be granted in subsequent phases to operators who meet the regulatory standards and demonstrate significant investment in gas distribution infrastructure.

500 Customer Stations, 1,200km of Gas Pipelines Covered

Ahmed highlighted that the licences cover a combined gas distribution capacity of 1.5 billion standard cubic feet (bscf) per day, with a 1,200km gas distribution pipeline network and over 500 customer stations.

He noted that the GDL regime is expected to drive the development of Nigeria’s domestic gas market by supplying energy to industries, special economic zones, embedded power generation, and compressed natural gas (CNG) mobility schemes.

“Piped natural gas (PNG) provides a continuous supply, is cost-effective, safer, and eliminates storage challenges,” Ahmed said. “These benefits will not only improve energy efficiency but also support Nigeria’s growing energy needs.”

To ensure transparency and efficiency in gas distribution, Ahmed stated that NMDPRA will oversee tariff regulation and safety standards for GDL operations. He also announced that the authority has begun processing additional licences under the Gas Distribution Regulations 2023.

Speaking at the event, Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), reiterated the federal government’s commitment to implementing the PIA 2021 and ensuring broader gas accessibility.

Citing data from the African Development Bank (AfDB), Ekpo stressed the urgency of expanding clean energy access, noting that over 600,000 women and children die annually in Africa due to a lack of clean cooking solutions, while 1.2 billion women globally lack access to clean cooking.

“Continued exposure to carbon monoxide from traditional cooking fuels leads to severe air pollution, which is a leading cause of death among women and children,” Ekpo said.

He described the gas distribution licence issuance as a critical step in reducing reliance on traditional fuels, improving health outcomes, and advancing Nigeria’s energy transition goals.

Activist Omoyele Sowore will be arraigned today (Wednesday) following charges brought against him by the Inspector General of Police (IGP), Kayode Egbetokun, over social media posts in which Sowore referred to Egbetokun as an “illegal IG.” The case is being heard before Justice Liman at the Federal High Court in Abuja.

Sowore faces three counts under the Cybercrime (Prohibition, Prevention, etc.) Act, 2015, as amended in 2024. The charges stem from posts made on his verified X (formerly Twitter) account, where he allegedly described the IGP as “illegal IGP Kayode Egbetokun.” The police claim these statements were false and intended to disrupt public order and undermine the authority of the Nigeria Police Force.

According to the charge sheet (suit number FCH/ABJ/23/25), the first count alleges that on December 13, 2024, Sowore intentionally sent a message via his X account, referring to the IGP as “illegal,” knowing it to be false and with the intent to cause a breakdown of law and order. The second count accuses Sowore of making threats aimed at inciting Nigerians against the police and damaging the reputation of the IGP and the force. The third count relates to a post on December 20, 2024, in which Sowore allegedly stated, “The illegal IG of Nigeria Police Force, Kayode Egbetokun, will make the next #ENDSARS inevitable! He is working tirelessly towards it. Just a matter of time. #EgbetekunMustGo #Revolution.”

The police argue that these posts were designed to provoke unrest and challenge the legitimacy of the police leadership. Sowore’s legal team, led by Marshall Abubakar, has confirmed that they will address the charges in court. Meanwhile, political activist Deji Adeyanju has criticized the case as an abuse of the legal process, vowing to mount a robust defense.

Sowore was detained on Monday after refusing to comply with bail conditions set by the police, which included providing a Level 17 civil servant as a guarantor and surrendering his passport. He was detained at the IRT facility in Abuja following allegations of obstructing public officers and cyberstalking.

The charges against Sowore come amid ongoing tensions between him and Nigerian authorities, particularly after he posted a viral video in December 2024 alleging police extortion at a Lagos checkpoint. His refusal to meet the bail conditions has further escalated the situation, drawing attention to the case as it proceeds in court.

Rubio told Egypt about need to stop Hamas from governing Gaza again, US says

U.S. Secretary of State Marco Rubio told Egypt's foreign minister on Tuesday it was important to ensure Hamas can never govern Gaza again, the State Department said, with their call coming after President Donald Trump suggested Egypt and Jordan should take more Palestinians.

WHY IT'S IMPORTANT

Trump on Saturday floated a plan to "clean out" Gaza, where Israel's war has killed tens of thousands and caused a humanitarian crisis, in comments that echoed long-standing Palestinian fears of being permanently driven from their homes.

The suggestion by Trump was not mentioned in the U.S. State Department statement released on Tuesday after the call between Rubio and Egyptian Foreign Minister Badr Abdelatty.

Jordan and Egypt had pushed back over the weekend after Trump's comments that they should take in Palestinians from Gaza. Asked if this was a temporary or long-term solution, Trump had said: "Could be either."

KEY QUOTES

"He (Rubio) also reinforced the importance of holding Hamas accountable," the State Department said after Tuesday's call.

"The Secretary reiterated the importance of close cooperation to advance post-conflict planning to ensure Hamas can never govern Gaza or threaten Israel again."

CONTEXT

Rubio held a call a day earlier with Jordan's King Abdullah and the U.S. statement after that call, too, did not mention Trump's remarks on Palestinian displacement.

The latest bloodshed in the decades-old Israeli-Palestinian conflict was triggered on Oct. 7, 2023, when Palestinian Hamas militants attacked Israel, killing 1,200 and taking about 250 hostages, according to Israeli tallies.

Israel's subsequent military assault on Gaza killed over 47,000 Palestinians, according to the Gaza health ministry, and led to accusations of genocide and war crimes that Israel denies. The fighting has currently paused amid a fragile ceasefire.

Reuters

RUSSIAN PERSPECTIVE

Zelensky lacks legitimacy to sign any deal – Putin

Ukraine’s Vladimir Zelensky can participate in possible talks with Moscow if he wishes to, but he lacks the legitimacy to actually sign a peace deal, Russian President Vladimir Putin told journalist Pavel Zarubin on Tuesday. 

Negotiating with the de-facto Ukrainian leadership will not have any legal meaning, given that Kiev explicitly banned itself from engaging in talks with Moscow, according to Putin. 

In 2022, Zelensky, whose presidential term officially ended in May 2024, issued a decree prohibiting negotiations with Russia, and President Vladimir Putin specifically, a measure that remains in effect. Last week, Zelensky claimed the ban applies to all Ukrainian officials except himself, although the original decree did not specify a list of entities barred from talking to Russia, stating only that such negotiations were “impossible.”

“If we start negotiations now, they will be illegitimate… Because when the current head of the regime, that’s the only way to call [Zelensky] today, signed this decree, he was a somewhat legitimate president. But now he can’t cancel it, because he is illegitimate. That’s the trick, the catch, the trap,” Putin explained. 

However, the Ukrainian leadership could find a way out of this situation and circumvent the ban, Putin said, suggesting that the country’s parliament could do that. “According to Ukraine’s constitution, the president of Ukraine, even under martial law, cannot extend his term. Only the representative branch can have its term extended, that’s the Ukrainian parliament, while the president only has a five-year term, that’s it,” he said. 

Asked whether Moscow would actually talk to Zelensky if he expresses the desire to do so, Putin said the Ukrainian leader lacks any authority to actually strike any sort of deal with Russia. 

“It’s possible to negotiate with anyone. However, due to his illegitimacy, [Zelensky] has no right to sign anything. If he wishes to participate in talks, I will deploy people who will conduct such negotiations,” Putin said. He stressed that signing any deal would be a “very serious question” and the agreement must “guarantee the security of both Ukraine and Russia” for a “serious” period of time. 

Any potential peace agreement must be flawless from the legal standpoint, Putin emphasized, adding that the authority and legitimacy of Kiev’s negotiating team would be subjected to intense scrutiny and assessed by a whole team of legal experts.

WESTERN PERSPECTIVE

EU prolongs its Russia sanctions for 6 months after Hungary lifts its objections

The European Union agreed a 6-month extension Monday for a raft of sanctions aimed at depriving Russia of funds to finance its war against Ukraine after Hungary lifted its objections to the move.

The sanctions target trade, finance, energy, technology, industry, transport and luxury goods. They include a ban on the import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU. They will now remain in place at least until July 31.

Some measures were introduced in 2014 after Russia annexed Ukraine’s Crimean Peninsula, but the list grew significantly after Moscow’s full-fledged invasion of its neighbor almost three years ago.

On Friday, Hungarian Prime Minister Viktor Orbán called on the EU to intervene in a gas dispute that his country has with Ukraine. He said Kyiv’s decision to halt the transit of Russian gas into Central Europe had forced Hungary to turn to alternative routes, which raised energy prices.

To satisfy Orbán’s demand, the European Commission attached a statement to Monday’s sanctions rollover agreement, saying that it “expects all third countries to respect” EU energy security, and warned that it could take action to protect critical infrastructure like oil and gas pipelines.

“Hungary has received the guarantees it has requested concerning the energy security of our country,” Hungarian Foreign Minister Péter Szijjártó said in a statement. All 27 EU member countries must agree for the sanctions to be prolonged.

But already last week EU diplomats and officials expected Hungary to end its threatened blockade on the measures after U.S. President Donald Trump threatened to impose stiff taxes, tariffs and sanctions on Russia if an agreement isn’t reached to end the war in Ukraine.

In a post to his Truth Social site last Wednesday, Trump urged Russian President Vladimir Putin to “settle now and stop this ridiculous war.” Orbán is seen as Putin’s closest ally in the 27-nation EU, but he’s also a staunch admirer of Trump.

RT/AP

Ashton Johnson

Mark Cuban advises young people to approach their careers the same way that many professional athletes do: like they’re free agents.

The self-made billionaire entrepreneur and minority owner of the NBA’s Dallas Mavericks recently took to social media platform BlueSkyto share his top piece of career advice for young professionals, responding to a post about college graduates feeling “locked into” a specific career path for the rest of their lives.

“I tell every kid that asks, that you paid money to learn. Now it’s time to get paid to learn,” wrote Cuban, 66. “You need to be the best as you can at your job ... But you are always a free agent. You can always be looking and learn more in a new job.”

Cuban followed that advice to build his own career. In his 20s, he landed a job at a computer software sales company despite having only one computer science class under his belt — so he studied computer manuals to teach himself how the technology worked.

The self-education helped Cuban launch his first startup, a software company called MicroSolutions, about a year later. In 1990, he sold MicroSolutions to CompuServe for $6 million.

Highly successful people often share soft skills like curiosity and an eagerness to learn, according to CEOs from Amazon’s Andy Jassyto Kickstarter’s Everette Taylor. Just be careful thinking of yourself as a constant free agent in the job market, says Patrice Williams Lindo, CEO of career consulting firm Career Nomad.

If you interpret “free agent” as constantly having one foot out the door, always looking for your next opportunity, you’ll struggle to perform well at your current job and foster workplace relationships that could pay dividends later in your career, Lindo says.

“Relationships matter. While staying open to opportunities is smart, being a ‘free agent’ doesn’t mean neglecting the importance of building trust, collaboration and loyalty within your current role,” says Lindo. “These relationships are often the gateway to future opportunities.”

Plus, constant job-hunting can “lead to burnout, or prevent individuals from fully immersing themselves in their current work,” she adds.

Instead of always looking for a new, better opportunity, try to focus on “staying relevant in a rapidly changing job market,” Lindo says. “Professionals should prioritize continuous learning and growth. Cuban’s focus on ‘getting paid to learn’ is especially valuable — every role should offer opportunities to build skills, expand your expertise, and increase your market value.”

CNBC

Investors sold technology stocks across the globe on Monday as they worried that the emergence of a low-cost Chinese artificial intelligence model would threaten the dominance of current AI leaders like Nvidia, shaving $592.7 billion off the chipmaker's market value.

Last week, Chinese startup DeepSeek launched a free AI assistant that it says uses less data at a fraction of the cost of incumbent services. By Monday, the assistant had overtaken U.S. rival ChatGPT in downloads from Apple's app store.

This led the tech-heavy Nasdaq to fall 3.1% on Monday. Nvidia was the Nasdaq's biggest drag, with its shares tumbling just under 17% and marking a record one-day loss in market capitalization for a Wall Street stock, according to LSEG data.

Nvidia's market-cap loss on Monday was more than double the previous one-day record, set by Nvidia last September.

The Nasdaq's next-biggest drag was chipmaker Broadcom Inc, which finished down 17.4%, followed by ChatGPT backer Microsoft, which fell 2.1% and then Google parent Alphabet, which ended down 4.2%.

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The Philadelphia semiconductor index tumbled 9.2%, for its biggest percentage drop since March 2020 and its biggest decliner was Marvell Technology, which tumbled 19.1%.

U.S. equity declines followed a selloff that started in Asia, with Japan's SoftBank Group finishing down 8.3%, and moved through Europe where ASML fell 7%.

"If it’s true that DeepSeek is the proverbial 'better mousetrap,' that could disrupt the entire AI narrative that has helped drive the markets over the last two years," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

"It could mean less demand for chips, less need for a massive build-out of power production to fuel the models, and less need for large-scale data centers."

The hype around AI has powered a huge inflow of capital into equities in the last 18 months, inflating valuations and lifting stock markets to new highs.

AI optimism supercharged Wall Street in recent years

As recently as Wednesday, U.S. AI-related stocks had rallied sharply after President Donald Trump announced a private-sector plan for what he said would be a $500 billion investment in AI infrastructure through a joint venture known as Stargate.

Since then, SoftBank announced a $19 billion commitment to help fund the Stargate venture whose other backers include ChatGPT developer OpenAI and Oracle , whose shares finished down 13.8% on Monday.

In their flight from risk, investors sought out safe-haven government bonds and currencies. The benchmark U.S. Treasury 10-year yield fell to 4.53% while in currencies Japan's yen and the Swiss franc rallied against the U.S. dollar.

Deutsche Bank analyst Adrian Cox wrote in a research note on Monday that DeepSeek was "sowing seeds of doubt to the 'bigger is better' approach that has fuelled the AI race up to now."

Still, Cox said that "cheaper AI is likely to mean more AI, with an explosion in real-life uses as it becomes available in myriad forms on every conceivable device."

DEEPSEEK 'SPUTNIK MOMENT'

After the release of the first Chinese ChatGPT equivalent, made by search engine giant Baidu, there was widespread disappointment in China over the gap in AI capabilities between U.S. and Chinese firms.

But the apparent quality and cost-efficiency of DeepSeek's models changed this view, with Silicon Valley executives showering praise on DeepSeek-V3 and DeepSeek-R1.

Little is known about the Hangzhou startup behind DeepSeek, whose controlling shareholder is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer, based on records.

Its researchers wrote in a paper last month that DeepSeek-V3 model, launched on Jan. 10, used Nvidia's lower-capability H800 chips for training, spending less than $6 million.

DeepSeek-R1, released last week, is 20 to 50 times cheaper to use than OpenAI's o1 model, depending on the task, according to a post on DeepSeek's official WeChat account.

Marc Andreessen, the Silicon Valley venture capitalist, said in a post on X on Sunday that DeepSeek's R1 model was AI's "Sputnik moment," referencing the former Soviet Union's satellite launch that marked the start of the space race in the late 1950s.

"DeepSeek R1 is one of the most amazing and impressive breakthroughs I've ever seen — and as open source, a profound gift to the world," he said in a separate post.

However, Daniel Morgan, senior portfolio manager at Synovus Trust Company, which owns almost a million Nvidia shares, called Monday's selloff an over-reaction.

Morgan said that because DeepSeek's AI model is for use on mobile phones and PCs rather than data centers, it competes with ChatGPT, Meta Platforms and Alphabet’s Gemini.

"The real money in AI is providing the chips for the data centers from the likes of (Nvidia), Advanced Micro Devices and Broadcom," said Morgan. "Overall, I view the AI tech selloff today as an opportunity to add high-quality tech shares on weakness."

Still, Nvidia fell $24.20 on Monday to end at $118.42. The stock, now down 11.8% for the year to date, rose 171% in 2024 and about 239% in 2023 to trade at 56 times the value of its earnings as investors saw it as the best way to bet on the emergence of AI technology.

Among other stocks, Vertiv Holdings, which builds data center infrastructure, slumped 29.9%.

Investors also sold off shares of power utilities, which had recently rallied sharply on hopes for a massive demand surge from power-hungry data centers needed for AI.

Vistra shares fell 28.3% while Constellation Energy shares fell 20.8% and NRG Energy lost 13.2%.

Reuters