ChatGPT, meet DeepSeek. The latter is a Chinese startup whose new AI assistant has just overtaken ChatGPT as the top downloaded app for iPhones. DeepSeek is also ratting US tech stocks—chip-maker Nvidia in particular—because its success threatens to undermine the world of artificial intelligence with a relatively inexpensive new way of doing things. In short, it may have built a better chatbot, on the cheap. Coverage:
- New mindset: "The conventional thinking was that AI companies needed expensive, leading-edge computer chips to train the best systems," explains the Wall Street Journal. But DeepSeek claims to need less-expensive chips to achieve results comparable to those of bigger players such as OpenAI and Google. Users have been praising its performance and its reasoning in tackling problems, notes CNBC.
- The pain: Nvidia was down about 16% in mid-day trading, translating to a market value loss of more than $400 billion. The tech-focused Nasdaq index was down more than 3%, while Microsoft, Meta, and Google parent Alphabet (all heavily invested in AI projects) were down 3% as well. Generally speaking, global tech stocks were getting clobbered, reports CNBC.
- The company: The Chinese startup was founded in 2023 by Liang Wenfeng, co-founder of the High Flyer hedge fund, per the Washington Post. It claims to have spent about $6 million training its latest models, a relative pittance in the field. (The Hill notes that Meta just announced a $60 billion AI investment.)
- Backfiring sanctions? The New York Times notes that Chinese companies such as DeepSeek have been forced to improvise because of US trade restrictions, and it may have paid off: "DeepSeek's engineers said they used only a fraction of the highly specialized computer chips that leading AI companies relied on to train their systems," per the Times, citing their research paper.
- A rave: Marc Andreessen, a big name in tech investing and an ally of President Trump, tweeted Monday that DeepSeek's new (and free) R1 model is "one of the most amazing and impressive breakthroughs I've ever seen" and "a profound gift to the world."
- A caveat: Plenty of analysts are urging caution before predicting long-term disaster for AI stocks, given the industry's ever-changing demands. "Is DeepSeek doomsday for AI buildouts?" asks semiconductor analyst Stacy Rasgon of Bernstein Research, per the Journal. "We don't think so."
(Last week, OpenAI, Oracle, and SoftBank recently announced a joint venture, called Stargate and
supported by President Trump, that aims to spend up to $500 billion on data centers for AI projects.)
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