Christopher Rokos Recalls the Jevons Paradox in Connection with DeepSeek, Labelling it a “Sputnik Moment” [Letter to Investors]

Billionaire British hedge fund manager Christopher Rokos believes DeepSeek’s open-source large language model should raise investment into artificial intelligence — not lower it. He also expects risk premia to remain elevated due to “violent and frequent communication from the Trump administration.”

The Jevons paradox in AI

In his year-end letter for Rokos Capital Management, he noted that the launch of DeepSeek’s LLM routed technology names in 2024, triggering a significant sell-off. The market feared that the company’s apparently more efficient models would reduce AI investments because they require less computing power for training.

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However, Rokos recalled the Jevons paradox, which states that improved efficiency results in a more rapid rate of resource consumption....