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The AI industry has been turned on its head in the last week with the release of the Chinese-made AI model DeepSeek, which has shot to the top of the Apple Store’s downloads, topping ChatGPT while stunning investors and sinking tech stocks at the same time. So, what is this new AI tool, and will it live up to the hype? It is hard to predict in such a fast-changing sector, but this post will take a closer look at DeepSeek and why it has upended the AI sector in just a few days.
What Is DeepSeek?
DeepSeek is a free AI-powered chatbot that operates in a similar way to ChatGPT. The company made headlines in global AI circles recently by writing in a paper that the training of DeepSeek-V3 required less than $6 million worth of computing power from Nvidia H800 chips, which essentially means that it cost a fraction of the cost to develop compared to AI models, such as OpenAI, from US tech giants.
Why Is DeepSeek Causing Such a Stir?
There are a few reasons why DeepSeek has been splashed all over the news in the last week or so. The primary reason is that a number of major US companies, including Nvidia and Microsoft, have seen significant declines in stock value, with Nvidia’s market value dropping by an eye-watering $600 billion, which is the largest in U.S. stock market history. This drop is thought to be due to investor concerns about the substantial investments that were required for US-developed AI models when China has been able to deliver a product of comparable quality for a fraction of the cost.
DeepSeek has also caused concern in the US about China’s push for tech supremacy. One of the ways that Washington has contained this has been a ban on the export of advanced chips to China, but President Xi Jinping has declared AI a top priority. US President Donald Trump said that the emergence of DeepSeek was a “wake-up call” for US companies who need to focus on “competing to win”. Ivan Feinseth, market Analyst at Tigress Financial, described it as “the first shot at what is emerging as a global AI space race,” while venture capitalist Marc Andreessen claimed that “DeepSeek-R1 is AI's Sputnik moment”.
Will It Live Up to the Hype?
It is hard to say whether DeepSeek will live up to the hype, but it is clear that there is a lot of buzz around the chatbot app as it surpassed ChatGPT as the most downloaded free app on the App Store. There have already been some controversies about the app, including its response to questions asked about Taiwan and Tiananmen Square, which could hinder its popularity in the West.
The rapid emergence of DeepSeek shows a huge step in the development of the AI sector and could upend America’s dominance in AI. It is thought that this could “add fuel” to the AI race and lead to the development of better models that provide a superior experience without the high development costs in the years to come.
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