DeepSeek has made quite the headlines this week—from its cyberattack sign-up restrictions, taking over ChatGPT as the most downloaded free app on the APP Store, and now, leaving tech investors scrambling and Wall Street upside down.
Recently, the Chinese AI startup took over ChatGPT as the most downloaded free app on the IOS App Store. What was the impact? About $1 trillion US tech stocks get wiped off in a single day.
What is Deepseek, and Why All the Fuss?
The Chinese AI company, DeepSeek was founded in 2023 by Liang Wenfeng and managed to develop a Chatbot capable of competing with industry giants like OpenAI’s ChatGPT. However, what makes it a headline is that despite its Western counterparts which require tens of thousands of Nvidia GPUs to function, DeepSeek utilizes only 2,000 Nvidia H800 chips—and yet it delivers performance rival to some of the best AI out there.
This has made the AI tech world question the overestimated need for excessive hardware and billion-dollar budgets for AI. DeepSeek’s efficiency, thus suggests that powerful AI doesn’t necessarily need massive infrastructure, a feat that is already disrupting the current AI business model.
How DeepSeek Took Over U.S. Tech Stocks
The moment DeepSeek’s success became public, markets reacted. Nvidia, Microsoft, and even Tesla were among the biggest causalities, with Nvidia suffering a record 17% drop in its stock price.
Thing is, investors have been betting bi on the U.S. tech giants dominating AI, but DeepSeek’s emergence has cast doubt on whether America can maintain its lead…a shift that has left investors rattled.
The U.S. – China Rivalry in All This.
For years, the U.S. has tried to limit China’s access to advanced AI chips and technologies, it seems however, these sanctions may not be as effective as hoped. If a Chinese startup can develop such AI models with limited resources, what does this mean for the AI competition?
As of now, this development is being compared to a “Sputnik moment,” as reference to when the Soviet Union launched its first satellite, shocking the U.S. and igniting The Space Race…this, could very well be a similar point in the AI race.
Where does this leave AI and its Investments?
As investors try to assess how DeepSeek’s continued rise is going to impact the market, it is expected to notice expert fluctuations in the major AI-related stocks.
Companies that once held monopoly over AI advancements may need to rework their strategies to maintain their edge.
With a Chinese AI application making rounds in the U.S., where policymakers are working hard to restrict Chinese tech, there might be a new set of regulations or restrictions. May!
Open-source AI may be the next “big thing” as DeepSeek’s open-source approach could potentially make AI development more accessible, leading to even more competition.
As of now, investors, developers and even policymakers are trying to react to the whole ordeal…the AI war just got a whole lot more interesting.
Nightmare on Wall Street as tech stock loses $1T over Chinese AI Startup DeepSeek.
