Artificial Intelligence (AI) is constantly evolving and there is a new player in the market. DeepSeek, a new AI model from China, has captured the attention of the tech world, outperforming companies like ChatGPT, Gemini, and Claude AI.
What is DeepSeek?
DeepSeek is an advanced AI model developed by a research laboratory of the same name based in Hangzhou. It was founded in 2023 by Liang Wenfeng, an engineer with experience in artificial intelligence and quantitative finance.
Based on the DeepSeek-V3 model, an advanced open source AI system, it overtook OpenAI’s ChatGPT to become the highest-rated free app on Apple’s App Store in multiple countries, including the US, UK and China. DeepSeek’s rise to prominence made waves in Silicon Valley, challenging the belief that the United States held a dominant position in this space.
The latest version of DeepSeek, R1, rivals industry leaders like OpenAI and Anthropic, but stands out by being cost-effective, open source, and offering unlimited free use. It enables access to high-performance AI without the high costs typically associated with such technologies.
How is DeepSeek different from OpenAI and Meta?
DeepSeek distinguishes itself from competitors like OpenAI and Meta by focusing on affordability and efficiency. While companies like OpenAI and Meta develop highly advanced models that require significant resources and expensive AI chips (like Nvidia’s H100 GPUs), DeepSeek has created models that perform similarly but at a fraction of the cost. DeepSeek’s use of more affordable AI hardware and innovative approaches to model training allows it to compete with the big players while keeping costs low.
Their chatbot app also offers unique features, such as articulating its reasoning before responding, which sets it apart from OpenAI models like ChatGPT. This open source approach allows developers to take advantage of DeepSeek’s technology, a key part of its appeal.
Why is DeepSeek gaining attention?
The key reason for the hype around DeepSeek is that the Chinese AI assistant is free, unlimited and open source. It is celebrated for its transparency, efficiency, and ability to make AI accessible to all.
DeepSeek’s breakthrough comes at a time when the United States has imposed restrictions on exports of advanced semiconductors to China, aiming to limit China’s ability to advance AI. DeepSeek has managed to get around these restrictions by developing models that require fewer resources.
This has raised concerns in the United States, where tech giants Nvidia, Meta and Microsoft have invested heavily in AI infrastructure that could soon face increased competition from low-cost alternatives like DeepSeek.
Impact on US stocks
The rise of DeepSeek has had an immediate effect on stock markets. Shares of major US AI-related companies, including Nvidia, Meta and Microsoft, fell in response to the success of DeepSeek. Analysts have warned that the rise of low-cost Chinese alternatives to established US AI models could disrupt the investment landscape, forcing companies to reconsider their AI strategies.
As DeepSeek continues to gain traction, other companies in the AI supply chain, such as AI hardware and chip makers, may see their profits reduced.
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