Last week saw the release of DeepSeek, a cheaper alternative to ChatGPT from a Chinese AI company that is now seriously disrupting the world of AI. According to the BBC, DeepSeek has now overthrown all competition to become the most downloaded free app in the United States.
DeepSeek’s impact has been so profound it caused the stock of giants such as Nvidia, Microsoft, and Meta to drop considerably, and now casts a huge shadow of uncertainty over the future of its competitors.
What makes DeepSeek so dangerous to other AI chatbots?
The main reason behind ChatGPT’s meteoric rise was the huge amount of money parent company OpenAI managed to pour into its development. Just last week, after the inauguration of President Trump, OpenAI and other AI companies pledged to invest $500 billion dollars into the construction of AI infrastructure in the US. DeepSeek, on the other hand, is based on the DeepSeek-V3 model, which is open source, and was allegedly trained for no more than $6 million. It’s seemingly already providing superior results to those of its competition.
DeepSeek is seemingly emerging out of a response to the United States restricting the sale of advanced chips to China. Now, instead of having to rely on the most advanced — and costly — tech, China’s AI chatbot is relying on everyone’s help to improve its functionalities. This has, so far, resulted in AI models that require far less processing power.
As of Monday, Nvidia and Broadcom saw their stocks plunging by 18%. Microsoft saw a drop of 2.5%, and Alphabet, Google’s parent company, saw its stock drop by 4%.
The explanation so far? Fiona Cincotta, senior market analyst at City Index, says they were blindsided.
“This idea of a low-cost Chinese version hasn’t necessarily been forefront, so it’s taken the market a little bit by surprise,”
Who’s behind DeepSeek?
DeepSeek is the brainchild of Liang Wengfeng, a 40-year-old engineer and hedge fund founder from Hangzhou, China. According to the MIT Technology Review, he built up a store of Nvidia A100, which you can no longer get in China from the US. Researchers believe Wengfeng then paired up these chips with cheaper ones that the people of China still have commercial access to.
In a separate development, possibly related to a response to this new threat, DeepSeek will temporarily limit new user registrations because of what the company describes as large-scale malicious attacks on the DeepSeek software.
Published: Jan 28, 2025 03:55 am