what is deepseek?
A Chinese artificial intelligence enterprise, DeepSeek, has ignited a surge of intrigue across America while sending tremors through Wall Street. Its latest technology, hailed by some specialists as a formidable contender to OpenAI’s ChatGPT, is commanding attention not only for its capabilities but also for its disruptive implications.
What has truly blindsided analysts and investors alike is DeepSeek’s remarkably economical development process. Wedbush Securities analyst Dan Ives assessed the cost of creating its AI app at a mere $6 million—a stark contrast to the staggering $1 trillion investment forecasted for AI advancements by juggernauts like OpenAI, Google, and other U.S. firms over the next few years, as projected by Goldman Sachs.
The ripple effects of DeepSeek’s debut were immediately felt in the stock market. Shares of AI powerhouses, such as Nvidia—renowned for its cutting-edge chips designed to fuel AI progress—and the Dutch semiconductor titan ASML, experienced notable fluctuations. The emergence of this Chinese disruptor has sparked pivotal questions about the future demand for Nvidia’s chips and whether the exuberance surrounding tech stocks tied to AI, from Meta to Microsoft, has been overly optimistic.
“DeepSeek’s ability to achieve groundbreaking results with minimal resources has sent shockwaves through the industry,” remarked Giuseppe Sette, president of Reflexivity, an AI market intelligence firm, in an email statement. “This is a testament to the unpredictable twists that AI innovation will continue to bring in the coming years.”
Adding to the whirlwind of developments, DeepSeek’s announcement coincides with news of a groundbreaking $500 billion initiative spearheaded by former President Trump in collaboration with OpenAI, SoftBank, and Oracle. Dubbed “Stargate,” the venture is envisioned as a linchpin for securing America’s technological edge.
Through its strategic ingenuity and unanticipated efficiency, DeepSeek has not only captured the spotlight but also set a bold precedent, challenging the established norms of an industry poised for relentless transformation.
How does DeepSeek stand apart from other AI applications?
DeepSeek is an open-source, expansive language model that utilizes a technique referred to as “inference-time computing.” In simple terms, Sette explained that this method activates only the most relevant parts of the model in response to each query, leading to significant savings in both financial costs and computational resources.
Some industry experts have lauded DeepSeek’s performance, including tech investor Marc Andreessen, who shared his excitement on X on January 24. He described DeepSeek R1 as “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 appointed by Mr. Trump to oversee AI and cryptocurrency policy, also weighed in on the innovation. He posted on social media Monday, expressing that DeepSeek’s app indicates the AI race will be fiercely competitive.
However, not everyone is as enthusiastic about DeepSeek’s future. Ives expressed doubts about its potential to gain traction among major U.S. corporations. “No U.S. Global 2000 company is going to trust a Chinese startup like DeepSeek to drive their AI infrastructure and use cases,” Ives wrote. “At the end of the day, there is only one chip company in the world pushing forward autonomous, robotics, and broader AI applications, and that company is Nvidia.”
What does DeepSeek mean for Nvidia and other tech firms?
Wall Street is grappling with the potential long-term effects of a low-cost AI tool from China that competes with ChatGPT and other generative AI platforms. It also raises concerns about whether Silicon Valley is overinvesting in AI advancements, as noted by Angelo Zino, senior equity analyst at CFRA Research, in an email.
“The fact that this technology uses less energy and is more affordable than U.S.-based models is causing considerable unease among U.S. tech investors,” said Jay Woods, chief global strategist at Freedom Capital Markets.
Another question is how the White House might respond, particularly with Mr. Trump hinting at the possibility of imposing new tariffs on Chinese imports. However, he also allowed a temporary reprieve for the Chinese-owned TikTok, directing the Justice Department not to enforce an impending ban. Some analysts on Wall Street believe the stock selloff seen on Monday may have been an overreaction, pointing out that the overwhelming demand for AI will continue to propel key players in the industry.
“It’s one thing to train a [large language] model for less, but meeting the massive demand for AI technology still requires substantial infrastructure,” said Adam Crisafulli of VitalKnowledge in his report.
Analysts from Bernstein Research also observed that while DeepSeek’s technology appears promising, it’s likely not as groundbreaking as some have suggested, arguing that Monday’s market drop might have been an overreaction.
What is Nvidia’s take on DeepSeek?
In a statement to CBS News, Nvidia expressed admiration for DeepSeek.
“DeepSeek represents a significant AI advancement and stands as a prime example of test-time scaling,” the company noted in an email. “Their approach showcases how new models can be developed using this method, all while relying on widely accessible models and compute that meets export-control standards.”
However, Nvidia pointed out that AI inference—using AI models for decision-making or predictions—requires large amounts of NVIDIA GPUs and high-performance networking. “We now have three scaling laws: pre-training, post-training, and the new test-time scaling,” the company added operations. If implemented thoughtfully, this tool can be a game-changer for industries across the board.
Conclusion: The Changing AI Landscape
DeepSeek has undeniably made a significant impact on the AI world, challenging major players like ChatGPT and Nvidia and introducing new opportunities for AI development and application. Its advanced capabilities, coupled with its efficiency and adaptability, make it a strong contender in the global AI race. As it continues to disrupt the status quo, it’s clear that DeepSeek is reshaping the future of artificial intelligence.
The rise of DeepSeek signals the onset of a new era in AI, where competition drives innovation, and new players emerge from unexpected regions. With China at the forefront of this shift, the future of AI is bound to be increasingly dynamic and unpredictable.