A Chinese company called DeepSeek is making waves in America and shaking up Wall Street. The company’s new technology has experts saying it might be as powerful as OpenAI’s ChatGPT. Investors are also paying attention because the cost to develop DeepSeek’s AI app is surprisingly low, only $6 million. In comparison, companies like OpenAI, Google, and others in the U.S. are planning to spend almost $1 trillion on AI in the next few years, according to Goldman Sachs.
On Monday, DeepSeek’s release caused big changes in the stock prices of AI companies like Nvidia, which makes advanced chips for AI, and ASML, a Dutch chipmaker. Some experts wonder if DeepSeek’s technology could reduce the need for Nvidia’s chips or if investors are overestimating the value of tech stocks that have been boosted by the promise of AI, such as those of Meta and Microsoft.
Giuseppe Sette, from the AI research firm Reflexivity, said, “DeepSeek has taken the market by storm by doing more with less.” He added that this shows how surprising AI developments will continue in the coming years.
DeepSeek’s new app was launched just days after President Trump announced a $500 billion partnership with ChatGPT maker OpenAI, Softbank, and Oracle, which he called the “future of technology” in the U.S.
What is DeepSeek?
DeepSeek is a free AI chatbot that works similarly to ChatGPT. Users continue to disagree about its performance relative to other competitors, but this artificial intelligence system accomplishes all basic functionalities. According to experts, the system’s performance closely matches OpenAI’s model o1, particularly within mathematical and code-related areas.
Like OpenAI’s model, DeepSeek employs a “reasoning” methodology to produce its outputs. It means the system generates answers step by step, which duplicates how humans solve problems. DeepSeek utilizes less memory allocation, which benefits in lower cost performance.
However, like many other Chinese AI models (including Baidu’s Ernie or ByteDance’s Doubao), DeepSeek is trained to prevent engagement with sensitive political topics. When BBC asked DeepSeek regarding the Tiananmen Square incident of 1989, the system replied, “I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.”
This censorship is a challenge for DeepSeek’s international ambitions, but the basic model relies on and uses real and accurate sources while implementing extra security measures for certain topics.
According to DeepSeek developers, their training cost approximately $6 million, whereas OpenAI spent more than $100 million on GPT-4 development. Experts think that DeepSeek’s founder managed to acquire Nvidia A100 chips, which the Chinese government banned for export since 2022. DeepSeek’s strong AI system was developed using 50,000 expensive Nvidia A100 chips that the founder combined with more affordable models.
The popularity of DeepSeek’s AI assistant increased when it became the top free app on Apple’s App Store, which also led to “malicious attacks,” causing the company to block new user sign-ups for a certain period.
Does DeepSeek Operate in the U.S.?
Yes, U.S. users can access DeepSeek’s AI app via Apple’s App Store and the website. The service operates without cost and has become the top download on the App Store. However, one issue users faced when trying to sign up was because of these unintended attacks. Users who already had DeepSeek accounts were still able to log into their profiles based on information from its Chinese website.
The release of their latest AI model by the company on January 20 has prompted Wall Street to rethink the AI industry. The executive Dan Ives at Wedbush stated, “DeepSeek built the model using reduced-capability chips from Nvidia, which is impressive and thus has caused major agita for U.S. tech stocks with massive pressure on Nasdaq this morning.”
How is DeepSeek Special from Other AI Apps?
DeepSeek functions as an open-source language model through its implementation of “inference-time computing.” This means it only activates those segments of the model that are required by queries, which preserves operational resources along with financial savings.
Experts have acknowledged the outstanding performance of DeepSeek. Marc Andreessen described DeepSeek as “DeepSeek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen—and as open source, a profound gift to the world.” David Sacks, a venture capitalist, agreed, saying that ” DeepSeek shows that the AI race will be very competitive.”
According to Ives DeepSeek, the company faces significant challenges when competing for business with major American corporations. He asserts that “No U.S. Global 2000 is going to use a Chinese startup, DeepSeek, to launch their AI infrastructure and use cases.” He believes that “At the end of the day, there is only one chip company in the world launching autonomous robotics and broader AI use cases, and that is Nvidia.”
Are There Any Privacy Problems with DeepSeek?
A group of specialists expresses doubts regarding the methods DeepSeek employs to protect user privacy. All user information stored by the company, including birth dates and key inputs, as well as text or audio data, uploaded files, and chat records, resides on Chinese servers. This has raised concerns similar to those surrounding TikTok, which also has Chinese ownership. A U.S. law passed during the previous year prohibited TikTok access but required the platform to get sold to other owners to operate within the country despite ongoing political discussions about the measure.
What Does DeepSeek Mean for Nvidia and Other Tech Companies?
Investors on Wall Street analyze potential market effects that the affordable DeepSeek AI tool will generate for both Nvidia and other American tech organizations. Many specialists doubt that American businesses went beyond necessary measures when acquiring AI technology.
Strategist Jay Woods said, “The fact that this technology is supposed to take less energy and is more cost-effective than U.S.-based models has U.S. technology investors very concerned.” However, the need for ample infrastructure along with ongoing AI market demand is expected to keep major players sustainable in the sector, according to certain experts.
Analysts at Bernstein Research believe that while DeepSeek’s technology is impressive, it isn’t revolutionary. They think the stock selloff might be an overreaction.
What Does Nvidia Saying About DeepSeek?
The company issued a statement congratulating DeepSeek for reaching its progress milestones. Nvidia declared, “DeepSeek is an excellent AI advancement and a perfect example of test-time scaling. In an email, the company said, “DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely available models and compute that is fully export-control compliant.”
However, the company stated that although AI inference processes require numerous Nvidia chips and high-speed network connections to work.
China About DeepSeek’s Growth and Success
DeepSeek’s success is being celebrated in China as a sign of the country’s growing technological independence. State media highlighted how U.S. companies are “losing sleep” over DeepSeek’s rise. Marina Zhang, a professor at the University of Technology Sydney, explained that DeepSeek’s success is seen as part of China’s “Innovation 2.0,” a new era of technological leadership driven by younger entrepreneurs. However, Zhang also warned that this sentiment could lead to “tech isolationism.”ether DeepSeek can overcome these challenges and establish itself as a major AI player.
