Billions have been wiped off the stock market after the Chinese-made DeepSeek AI app rocketed to the top of app download charts, with Nvidia heavily impacted.
DeepSeek, an AI assistant in the vein of OpenAI’s ChatGPT, rose to the top of app charts globally, advertised as being more sustainable than artificial intelligence models from Western countries. As a result, Nvidia, one of the biggest beneficiaries of the AI boom, lost almost US$600 billion (AU$957 billion) in market value in a single day of trading.
What is DeepSeek?
Based in Hangzhou, China, DeepSeek is a tech startup specialising in AI, particularly in large language models that are freely available via open source. It recently launched the R1 model, said to rival OpenAI’s o1 model’s performance while requiring lower computational demands.
It’s this last part that has tech investors sitting up and taking notice. Trained using a technique called “large-scale reinforcement learning”, the DeepSeek R1 model reportedly operates at a fraction of the cost of other models, like OpenAI’s o1, which uses “chain-of-thought” processing.
Resource efficiency is why DeepSeek’s sudden surge in popularity has caused shockwaves throughout Wall Street. Companies like Nvidia have invested billions in AI computing infrastructure; now investors are questioning the value when an overseas company proposes comparable performance at far lower costs.
Amidst the investor blowback, a cyberattack reportedly took the Chinese app offline, while its popularity continues to grow. Meanwhile, Nvidia labelled DeepSeek’s technology an “excellent AI advancement”.
Users online have discussed the new AI model’s performance in positive terms compared to OpenAI’s technology. However, as noted by some, including EFTM‘s Trevor Long, quizzing DeepSeek’s chatbot about sensitive topics like Tiananmen Square and Taiwan doesn’t yield a response.
While it’s very early days, there are also hopes that overseas competition can help reduce the cost and environmental impact of AI models in general.
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