Wall Street and Silicon Valley rallied on Monday over growing fears about Deepseek — a Chinese artificial intelligence startup that claims to have developed an advanced model at a fraction of the cost of its American counterparts.
Shares of NVIDIA and other big tech giants shed more than $1 trillion in market value as investors pored over details. Deepseek claims to build its model in months for just $6 million, increasing exposure to an industry that has budgeted hundreds of billions in spending on chips and other infrastructure.
Deepseek immediately rose to the top of the charts in Apple’s App Store over the weekend – displacing Openai’s Chatgpt and other competitors. The rapid growth has sparked panic that the US could lose its edge over China.
Here’s what to know about Deepseek:
What is Deepseek?
Deepseek was founded in May 2023. Based in Hangzhou, China, the company develops open-source AI models, meaning they are easily accessible to the public and any development can use it.
When was the Deepseek model released?
Deepseek released details earlier this month on R1, the reasoning model that underpins its chatbot. The AI firm turned heads in Silicon Valley with a research paper explaining how it builds the model.
Deepseek says the model excels at solving problems, despite being much cheaper to train and run than its rivals.
Is Deepseek better than chatgpt?
Deepseek claims that the performance of its R1 model is “on par” with the latest release from Openi.
Alexandr Wang, CEO of Scale AI, recently told CNBC that Deepseek is “the highest performing, or about the same time as the best US models.”
Who owns Deepseek?
Deepseek’s top shareholder is Liang Wenfeng, who runs the $8 billion Chinese hedge fund. High-Flyer has an office in the same building as its headquarters, according to Chinese corporate records obtained by Reuters.
Does Deepseek engage in censorship?
The AI Chatbot has already faced accusations of rampant censorship in line with the preferences of the Chinese Communist Party.
Deepseek admitted that its “programming and knowledge is designed to follow China’s laws and regulations as well as core socialist values,” according to a finding posted to the US House Select Committee on China.
The chatbot self-censored its responses when asked about China’s leader Xi Jinping, the 1989 Tiananmen Square Massacre, China’s human rights abuses of Uighurs in its Xinjiang province, and whether Taiwan is a country, according to examples.
Is Deepseek publicly traded?
Deepseek is a privately held startup and is not publicly traded in the US
Is Deepseek a threat to Nvidia?
Shares of NVIDIA fell as much as 17% in Monday trading on panic over Deepseek, wiping more than $600 billion in value from its market cap. However, the long-term threat Deepseek’s success poses to Nvidia’s business model remains to be seen.
For example, analysts at City said the approach to advance computer chips, such as those made by Nvidia, will remain a major barrier to entry into the AI market. Wedbush analyst Dan Ives described the chaos surrounding Deepseek’s launch as a “buying opportunity.
NVIDIA is also heavily involved in the President’s $500 billion Stargate AI infrastructure project.
Nvidia Bulls have noted that Deepseek still used its own chips to train the model, albeit with a less expensive footprint than previously thought.
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