- DeepSeek disrupts AI industry with a low-cost, energy-efficient model rivalling ChatGPT.
- AI-related stocks, including Nvidia and ASML, tumble amid fears of market shifts.
- Founder Liang Wenfeng leverages novel AI techniques to challenge Silicon Valley dominance.
DeepSeek, a Chinese artificial intelligence company, has made waves on Wall Street with the launch of its innovative AI app, which some experts claim rivals OpenAI’s ChatGPT.
The company’s technological breakthrough has captured attention not just for its capabilities but also for its remarkably low development cost, estimated at just $6 million by Wedbush Securities analyst Dan Ives. This figure is a fraction of the $1 trillion investment U.S. tech giants like OpenAI and Google are expected to pour into AI development over the coming years, according to Goldman Sachs.
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DeepSeek’s AI model, launched on January 20, employs a novel “inference-time computing” technique that activates only the most relevant portions of the model for each query, significantly reducing computation costs. The app quickly became the top download on Apple’s App Store over the weekend, although registration issues arose due to what the company described as “large-scale malicious attacks.”
The ripple effects of DeepSeek’s launch have shaken the stock market. AI-related stocks faced a selloff, with Nvidia’s shares plummeting 17% on Monday, Dutch chipmaker ASML falling 7.6%, and Broadcom dropping 18%. Energy-related stocks also suffered, as investors fear DeepSeek’s energy-efficient technology could diminish demand for traditional computing infrastructure. GE Vernova’s shares fell 23%, while Vistra plunged 30%. The Nasdaq index declined 3.5% in response to the market turmoil, though this was not its steepest drop in recent years.
DeepSeek was founded in July 2023 by Liang Wenfeng, a Zhejiang University graduate and hedge fund manager overseeing $8 billion in assets. Liang, known for leveraging AI in investment strategies, had reportedly stockpiled Nvidia A100 chips before U.S. export restrictions were implemented.
While the technology has been hailed as a potential game-changer, scepticism remains about its adoption in U.S. businesses. “No U.S. Global 2000 company will turn to a Chinese startup like DeepSeek to build their AI infrastructure,” Ives commented.
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Nevertheless, the company’s energy-efficient and cost-effective approach has sparked a reassessment of AI sector strategies. Analysts like CFRA Research’s Angelo Zino suggest that DeepSeek’s advancements may challenge the sustainability of Silicon Valley’s high spending on AI development.
Despite market jitters, some experts believe the reaction is overstated. “Massive infrastructure will still be needed to meet the growing demand for AI technologies,” said Adam Crisafulli of VitalKnowledge. Nvidia also acknowledged DeepSeek’s contribution, calling it “an excellent AI advancement,” while underscoring the continued reliance on Nvidia GPUs for large-scale AI applications.
