The revelation of China’s DeepSeek artificial intelligence tool is sending shockwaves throughout the industry, and a small Canadian AI operation was caught in the backlash as well. Verses AI (CBOE:VERS) (VRSSF) found itself down nearly 14% in Monday morning’s trading as this unexpected spoiler hit the markets.
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Basically, Verses was hit by the exact same brick that much of the tech sector was hit by today: that China has a new and powerful artificial intelligence tool known as DeepSeek R1. DeepSeek R1 offers most of the same capability that the current crop of AI platforms offer, but with the key difference that China has become famous for over the years: it is available at a mere fraction of the cost.
But Verses has one extra trick up its sleeve that may spare it from some of the worst of the DeepSeek hit, though it already took quite a wallop as its share price suggests. Verses is currently working with an unnamed but major Australian telecom operation to serve as a tool to fight illegal uses of telecom services. Hijacked accounts and other kinds of “fraudulent access” are plaguing telecom, and Verses’ AI tools might be able to winnow some of these down.
The Chinese Impact
It remains to be seen just how much impact DeepSeek R1 can actually have on the field. Reports noted that DeepSeek is currently being hit by a large-scale cyberattack of some sort, though this news is perhaps minutes old and still developing. There is another point to consider here, and that is the historical value of Chinese products.
China made a name for itself as the world’s factory, and produced just about everything imaginable for export. The down side to this is that quality was often a secondary consideration, as evidenced by everything from melamine in pet foods to lead in children’s toys to what is called “tofu-dreg construction,” a style of construction that seems to be limited to China. Tofu-dreg construction is a local term that refers to products of shoddy construction, a product that could fall apart imminently.
Is Verses a Good Stock to Buy?
Turning to Wall Street, no analysts currently hold a position on Verses AI stock, so instead, we turn to the last five days of trading. And the downward slump we saw with today’s plunge is only the latest installment of a series of downward moves. In fact, Verses is down over 33% in the last five days of trading alone, so the impact of DeepSeek R1 is less a single blow and more the straw that broke the camel’s back.
