Introduction of DeepSeek-R1
DeepSeek, a Chinese AI startup, has made headlines with the release of its open-source AI model, DeepSeek-R1. This model has drawn attention for its impressive performance in mathematics, coding, and reasoning benchmarks, rivaling established models like OpenAI’s o1. Notably, DeepSeek-R1 is much cheaper to train and operate compared to its Western counterparts, offering a new level of cost-efficiency in AI development.
DeepSeek AI Surpasses ChatGPT on App Store
Chinese startup DeepSeek’s AI Assistant became the top-rated free app on Apple’s App Store in the U.S. on Monday, surpassing ChatGPT. The app uses the DeepSeek-V3 model, which its creators claim is one of the best open-source models and competes with advanced closed-source models globally. Since its release on January 10, the app has gained popularity among U.S. users, according to Sensor Tower. AI models like DeepSeek and ChatGPT need powerful chips for training, and since 2021, the U.S. has expanded restrictions on exporting chips to China. DeepSeek researchers mentioned in a paper that their model used Nvidia’s H800 chips, costing under $6 million for training.
Success on the Apple App Store
The DeepSeek AI assistant app, powered by DeepSeek-R1, has rapidly climbed to become the top free app on the Apple App Store in the U.S., surpassing OpenAI’s ChatGPT app. Its rise is credited to its open-source nature, low cost, and user-friendly design, making advanced AI technology accessible to a broader audience.
Open-Source Accessibility
By releasing DeepSeek-R1 as open source, the company has enabled global developers and researchers to access, study, and improve the model. This approach contrasts sharply with the closed-source practices of many Western AI companies and reflects DeepSeek’s goal of democratizing AI technology.
Geopolitical and Economic Implications
DeepSeek’s success highlights China’s growing influence in AI innovation, challenging the dominance of U.S.-based tech giants. The development also raises concerns about the broader implications of advanced AI under China’s regulatory environment, potentially reshaping global AI dynamics.
Efficiency Amid Challenges
Despite U.S. sanctions restricting access to high-end AI chips, DeepSeek has innovated by optimizing its models for efficiency. The company has achieved high performance using less advanced hardware, demonstrating its ability to work around global constraints.
Industry Reactions and Market Impact
DeepSeek’s launch has sparked excitement and debate in the tech community. Experts see the model’s low-cost, high-performance approach as a disruptive force in AI development. However, it has also fueled discussions about how international tech competition and policy may evolve.
Stock Market Ripple Effect
The impact of DeepSeek’s success was immediately felt in the stock market. Nasdaq 100 futures dropped by 400 points, reflecting investor concerns about U.S. tech giants’ future. Nvidia, a major player in AI hardware, saw its stock decline by 5% as DeepSeek’s efficient model demonstrated a reduced need for high-end GPUs.
Chip stocks saw a sharp sell-off overnight following news related to DeepSeek. Key losses include Arm (-5.5%), Nvidia (-5.3%), Broadcom (-4.9%), Super Micro (-4.6%), and Taiwan Semi (-4.5%). Other declines were Micron (-4.3%), Qualcomm (-2.8%), AMD (-2.5%), and Intel (-2.0%). U.S. markets are expected to shed over $1 trillion in market cap during Monday’s session.
Why Nvidia Is Feeling the Pressure
DeepSeek trained its model using Nvidia’s H800 GPUs, which are subject to U.S. export restrictions. Yet, the startup managed to produce a competitive AI model at a fraction of the usual cost. This raises questions about Nvidia’s long-term dominance if more companies adopt efficient AI models that require less expensive hardware.
Cantor Fitzgerald: DeepSeek V3 is highly bullish for compute and $NVDA.
“Concerns over compute demand and peak GPU spending following DeepSeek’s V3 LLM launch are misplaced. This announcement brings AGI closer to reality, with Jevons Paradox likely driving higher AI compute demand. We recommend buying $NVDA on any dip.”
Broader Implications for AI Development
While Nvidia retains advantages like its CUDA platform and optimized software, the emergence of resource-efficient AI models like DeepSeek-R1 signals a shift in AI development priorities. Cost-effective innovations could reduce dependency on traditional hardware-centric approaches, potentially reshaping the industry.
What is DeepSeek: The New AI Competitor
DeepSeek is a new Chinese AI startup founded in May 2023 by Liang Wenfeng. It provides AI models as open-source resources. Its advanced models, DeepSeek-V3 and DeepSeek-R1, use large-scale reinforcement learning and reasoning. DeepSeek invested only $6 million in its latest model. Compared to OpenAI’s costs, which charge $15 per million input tokens and $60 per million output tokens, DeepSeek R1 offers much lower prices: $0.55 for input and $2.19 for output tokens. The company focuses mainly on research and doesn’t plan on commercializing its models soon.
Liang Wenfeng: The Mind Behind DeepSeek
Early Career: Liang Wenfeng studied machine vision at Zhejiang University.
Hedge Fund Success: At 30, he founded High-Flyer, a quant hedge fund, in 2015. The fund now manages $8 billion, making him wealthy.
AI Ambitions: Liang wanted to build human-level AI as a side project. His partners were initially skeptical.
Building the Foundation: In 2021, he bought 10,000 Nvidia H800 GPUs and recruited top talent from his hedge fund, experts at optimizing Nvidia hardware.
Launching DeepSeek: In 2023, he officially launched DeepSeek, hiring dozens of PhDs from China’s top universities (Peking, Tsinghua, Beihang) and paying salaries rivaling Bytedance.
Overcoming Restrictions: US export bans forced the team to innovate, creating cost-effective training methods for AI models (e.g., V3, R1) that compete with OpenAI, Anthropic, and others at 1/20th the cost.
Efficiency & Controversy: While their training methods are efficient, there’s speculation about possible copying, large undisclosed GPU clusters, or government backing.
Open Source: DeepSeek shares its methods openly, with a paper on R1 co-authored by over 200 researchers.
Big Achievement: DeepSeek’s AI app is now the #1 free app on the Apple App Store.
Conclusion
DeepSeek’s rapid rise underscores the changing landscape of global AI innovation. With its open-source approach, cost-efficiency, and ability to work around geopolitical challenges, DeepSeek represents a major shift in how AI technology is developed and deployed. While U.S. tech giants like Nvidia and OpenAI remain strong players, the rise of companies like DeepSeek signals a new era of competition and innovation in the AI world.
Update
Chip stocks continue to fall: $NVDA -7%, Broadcom -6.51%, Arm -6.5%, Taiwan Semi -6%, $SMCI -5.32%, Micron -5%, $AMD -4%, $INTC -3.12%, and $QCOM -3.55%. U.S. markets are set to lose over $1T in market cap on Monday.
Update
DeepSeek has limited registration to its services, allowing only users with a mainland China mobile phone number to sign up.
Stay informed with our financial updates, stocks, bonds, commodities. Get global & political insights. Follow us & enable notifications for the latest updates.
[…] DeepSeek AI Launch Expected to Causes $1T Loss in U.S. Markets […]
[…] Tech Giants Alibaba, Tencent Surge on AI Startup DeepSeek’s Breakthrough DeepSeek’s Rise: The Chinese AI Startup Shaking Up the Industry […]
[…] DeepSeek’s Rise: The Chinese AI Startup Shaking Up the Industry DeepSeek’s Breakthrough: A Game-Changer for Nvidia’s Dominance in the AI Arms Race bigbreakingwire […]
[…] DeepSeek’s Rise: The Chinese AI Startup Shaking Up the Industry DeepSeek’s Breakthrough: A Game-Changer for Nvidia’s Dominance in the AI Arms Race DeepSeek Shakes Up U.S. Markets: Nvidia and Nasdaq Futures Plunge bigbreakingwire […]
[…] DeepSeek’s Rise: The Chinese AI Startup Shaking Up the Industry DeepSeek AI Disrupts Tech Market with Cost-Effective Models, Shakes Investor Sentiment DeepSeek Shakes Up U.S. Markets: Nvidia and Nasdaq Futures Plunge bigbreakingwire […]
[…] DeepSeek’s Rise: The Chinese AI Startup Shaking Up the Industry Alibaba Unveils Qwen2.5-Max: A Game-Changing AI Model That Surpasses Competitors DeepSeek’s Breakthrough: A Game-Changer for Nvidia’s Dominance in the AI Arms Race bigbreakingwire […]