A relatively unknown Chinese startup, DeepSeek, has shaken the world of technology by releasing its artificial intelligence (AI) model, DeepSeek-R1. What is more astonishing is that the model, which has capabilities similar to those of AI technologies developed by OpenAI and Google, was created with fewer resources and less advanced computing power.
The announcement of DeepSeek has opened up debates about the future of AI innovation. According to the company, it spent less than $6 million training the model, an amount that dwarfs the billions of dollars US tech giants Alphabet, Meta, and OpenAI have invested. This resource efficiency has shone a spotlight on the emerging potential of the global AI race players, raising implications for US dominance in the field.
Chinese Startup DeepSeek AI Model Impacts Nvidia, Wallstreet Shares
A leading venture capitalist, Marc Andreessen, called the release of DeepSeek-R1 “AI’s Sputnik moment,” in reference to the technological shockwaves created by the Soviet Union’s launch of a satellite in 1957. This development has rocked the tech world as investors question the sky-high valuations of companies such as Nvidia, Alphabet, and Meta.
The impact was immediate on Wall Street, where shares of Nvidia, the dominant semiconductor supplier for generative AI, fell 17%, erasing almost $600 billion in market capitalization.
DeepSeek, founded in late 2023 by entrepreneur Liang Wenfeng, is based in Hangzhou and has largely operated under the radar. Liang, who also runs the hedge fund High-Flyer, is no stranger to technology-driven innovation. His earlier ventures, including Hangzhou Jacobi Investment Management, successfully integrated AI into trading strategies.
The surprise success has gotten the US President Donald Trump demanding more work towards staying ahead of competitors in AI development. Speaking of this after a meeting with OpenAI, Oracle and Japan’s SoftBank related to an upcoming AI initiative worth $500 billion, Trump said DeepSeek’s rise was a “wake-up call” for US industry to keep its eyes on dominating the AI space.
The sudden emergence of DeepSeek has redefined the narrative around AI development, proving that even the smallest startups can challenge the Silicon Valley giants.