In an illuminating interview with Bloomberg Television, Cathie Wood, the founder and CEO of Ark Investment Management, provided her insights into the seismic shifts occurring within the technology sector, particularly with the emergence of DeepSeek, a Chinese AI startup that promises to drastically reduce the cost of AI innovation.

A New Era of Affordable AI

Wood began by discussing how DeepSeek’s approach could transform the AI landscape. “I think what it’s telling us is the cost of innovation is collapsing, which it has been doing,” she stated, emphasizing that the cost of AI training and inference has been dropping at an annual rate of 75% and 85-90% respectively. This cost reduction shifts the focus from training chips, where Nvidia has been dominant, towards inference, where competition is more intense.

Implications for the Tech Stack

The shift has broad implications for the tech stack. “We do think there are share shifts taking place within the tech stack,” Wood remarked, hinting at an upcoming report from Ark where they will delve deeper into these changes. She predicted that companies like Palantir, which she holds in her portfolio, would gain significant market share in platform-as-a-service, while infrastructure-as-a-service might see stabilization, and software-as-a-service could experience a slight decline in share, though all sectors are expected to grow rapidly due to the cost efficiencies brought by DeepSeek.

Global Innovation and U.S.-China Dynamics

Wood also highlighted the broader global impact of such technological advancements. “Lowering costs is great for the world. The collapse in the cost of innovation should help all regions of the world,” she said, suggesting that this development could be seen as part of Xi Jinping’s vision for “new productive forces” in China, moving from a focus on margins to one on innovation.

Regarding U.S.-China relations under President Donald Trump, Wood drew an analogy to Nixon’s visit to China, suggesting that Trump’s approach might similarly lead to unexpected positive outcomes. “I think he likes the competition,” she noted, indicating that Trump’s policies could foster a new wave of technological competition beneficial for global innovation.

Regulation and Market Dynamics

On the regulatory front, Wood expressed concerns about over-regulation in the nascent stage of AI technology. “Now is not the time to regulate it heavily,” she argued, pointing out that AI is at a stage similar to the Internet in the early ’90s. She believes that the market’s current concentration in a few mega-cap tech firms might give way to a broader-based bull market, especially with regulatory clarity expected under Trump’s administration.

Crypto and Financial Innovation

Wood, known for her bullish stance on cryptocurrencies, discussed the potential for regulatory clarity under Trump, which she sees as a catalyst for Bitcoin and other digital assets. “I think we will get significant clarity in terms of regulation,” she predicted, noting that cryptocurrencies could become a mainstream financial tool with the support of all three branches of the U.S. government.

Stablecoins and the Future of Money

Finally, she touched on the rise of stablecoins, viewing them not as a threat to the U.S. dollar but as an enhancement. “These stablecoins are all backed by Treasury securities, which de facto they’re backed by the dollar,” Wood explained, advocating for a coexistence rather than a replacement of traditional currencies.

Cathie Wood’s insights paint a picture of a competitive tech arena where the barriers to innovation are diminishing, potentially ushering in an era of widespread technological prosperity, reshaping economic structures, and enhancing global competition in technology.