San Francisco Shaken by Chinese AI App DeepSeek
In a stunning turn of events, the new Chinese AI app DeepSeek has rocked the technology industry, the markets, and challenged American superiority in artificial intelligence (AI).
Venture capitalist Marc Andreessen captured the moment perfectly, describing DeepSeek-R1 as AI’s Sputnik moment, drawing a parallel to the satellite that kickstarted the space race.
DeepSeek quickly became the most downloaded free app on Apple’s US App Store over the weekend, causing a massive sell-off of major tech stocks as concerns grew over America’s dominance in the AI sector.
For example, shares of AI chip designer Nvidia plummeted by 17% by the close of US markets on Monday, resulting in a loss of nearly $600 billion in market value, marking the biggest drop in US stock market history according to Bloomberg.
This significant event was largely driven by the cost factor, with DeepSeek’s developers claiming to have built their latest model for just $5.6 million, a fraction of what other AI giants like OpenAI and Google have spent on developing their models.
As Silicon Valley grappled with this unexpected development, many were left speechless, with observers, investors, and analysts expressing a mix of shock and skepticism.
Veteran analyst Gene Munster raised questions about DeepSeek’s financial claims and the authenticity of its numbers, highlighting the uncertainty surrounding the situation.
Despite the doubts, DeepSeek’s emergence is seen as a “flex” by China and a setback for US tech, challenging the notion of American dominance in the AI race.
President Donald Trump acknowledged the impact of DeepSeek’s arrival, calling it a “wake-up call” for the American tech industry and emphasizing the importance of cost-effective AI.
The disruption caused by DeepSeek has forced a reevaluation of long-held assumptions about AI development, potentially reshaping the landscape of the industry.
While uncertainties loom over the future of semiconductor giants like Nvidia, the emergence of DeepSeek signals a new chapter in the global AI race, with implications for US-China tech relations.
Despite the challenges posed by DeepSeek, industry players like OpenAI acknowledge the competition and the need for innovation in response to this new entrant in the AI arena.
Just as Sputnik propelled the space age, DeepSeek’s impact on the AI race is set to shape the future of technology and competitiveness in the sector.
