AI Stock Crash Exposes Increasing Friction Between Imperialists
On Monday, January 27th, the U.S. stock market took a noticeable downturn. [1] This was off the heels of the release of DeepSeek AI, a program created in China, for free in the U.S. In response, investors began a sell off, causing Nvidia (a company valued at over $3 trillion and a leader in processing power and computer hardware,) to lose $600 billion in value. This created a period of market turmoil as it developed fears that many U.S. companies, not just “tech” companies, have been hedging billions of bets on the wrong horse, most notably Open AI. International firms have made it abundantly clear their optimism and enthusiasm surrounding the development of AI knowing it can be used to replace vast swaths of variable capital and vastly increase the productivity of individual workers who can’t simply be replaced, deepening the exploitation of said workers in the process.
But while stocks mostly recovered by the end of the day, it needs to be understood that these occurrences are going to become more frequent as the players in the imperialist system compete with one another on the new frontier of automation. The question will be when a strong enough ceiling is hit, where profits cannot so easily be won through the international stock market. Every headline of a technological investment in China that US investment firms didn’t anticipate is millions if not billions of dollars in stock market value that won’t land in the coffers of the various funds and private equity firms in the U.S. Which means it’s equally true that should signs of desperation show between camps, if they begin approaching a wall where investors cannot simply outmaneuver their rivals, they’ll begin marching the working masses to compete on their behalf. We can see more and more desperate measures being taken in the political sphere to prolong this, for example the CHIPS Act [2] passed under the Biden administration seeks to dramatically increase the U.S. production of semiconductors. Meanwhile, U.S. President Donald Trump announced on the 28th of January his administration will, as of writing this article, be seeking to place tariffs on semiconductors imported from Taiwan. [3] Both of these strategies present a high potential for supply issues in the immediate term, trouble for investors, and will certainly increase the costs of electronics across the board, leaving a struggling working class saddled with even larger costs to overcome, but for a bourgeois that recognizes the very crisis we’re predicting, moving the bulwark of U.S. semiconductor supply from a country off of China’s coast would prevent a catastrophic situation for the U.S. Lastly, on the 30th OpenAI responded by trying to rally investors to increase its value and have capital to expand in efforts to compete with DeepSeek [4] while also levying accusations that DeepSeek could have used U.S. models to train its own, describing the practice as “unfair” [5], although this does very little to put a lid on what’s already been opened.
These facts without question show the current role the pursuit of AI has in the broader inter-imperialist rivalry, yet some bizarre reactions have come up. Most notably those camps who’s total analysis begins and ends with the “destruction of the west” without analyzing the class forces at play, causing those of these sects to in fact celebrate! It's a sign of a fantasy being fulfilled where their favorite head of a competing imperialist block will overthrow the U.S.’ position in the imperialist system and will liberate the working class from “the west!” This fantasy however, overlooks the exploitation that will be conducted in the meantime to maintain this competition, and the bodies of workers that will be laid to waste in the event it comes to a head, neither of which are in the interest of the working class of any country. Only the overthrow of capital can avert these economic contradictions and prevent these conflicts from breaking out.
Sources
1. LEHTONEN, SCOTT, and Investor’s Business Daily. “Futures: AI Leaders Crumble on DeepSeek Fears.” Investor’s Business Daily, 28 Jan. 2025, www.investors.com/market-trend/stock-market-today/dow-jones-futures-nvidia-stock-bro adcom-astera-deepseek/.
2. Peterson, Dylan. “America Projected to Triple Semiconductor Manufacturing Capacity by 2032, the Largest Rate of Growth in the World.” Semiconductor Industry Association, 8 May 2024, www.semiconductors.org/america-projected-to-triple-semiconductor-manufacturing-capa city-by-2032-the-largest-rate-of-growth-in-the-world/.
3. Porter, Tom, and Hasan Chowdhury. “Trump’s Taiwan Chip Tariff Threat Could Be a Fresh Blow to Nvidia.” Business Insider, 28 Jan. 2025,
4. www.businessinsider.com/trump-taiwan-chip-tariffs-nvidia-stock-tsmc-deepseek-2025-1. 4. Field, Hayden, and Kate Rooney. “OpenAI in Talks to Raise Funding That Would Value AI Startup at up to $340 Billion.” CNBC, 30 Jan. 2025, www.cnbc.com/2025/01/30/openai-in-talks-to-raise-up-to-40-billion-at-340-billion-valuat ion.html. Accessed 31 Jan. 2025.
5. Olcott, Eleanor, and Cristina Criddle. “OpenAI Says It Has Evidence China’s DeepSeek Used Its Model to Train Competitor.” @FinancialTimes, Financial Times, 29 Jan. 2025, www.ft.com/content/a0dfedd1-5255-4fa9-8ccc-1fe01de87ea6.