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On January 20 DeepSeek launched its DeepSeek-R1-Distills models. On January 27, shares for NVIDIA, the U.S. AI chip mogul plummeted. On January 29, panic and skepticism began to spread with Australia’s science minister, Ed Husic, raising concerns over data privacy and security. The next big AI is ready. But are we?
DeepSeek was founded in May 2023 by Liang Wenfeng, who is also the co-founder of High Flyer. Unlike many other industry leaders in the tech sector, Liang has a background and passion for finance, and initially created a software that could analyze financial data to make better investment decisions. Over time, Liang began to develop DeepSeek, a generative AI that most compare to everyone’s favourite study buddy, ChatGPT. Like ChatGPT, DeepSeek is able to respond to queries instantly, generate ideas, and (to the extreme chagrin of English teachers everywhere) write a flawless thesis statement.
So what’s the difference between the two? Unlike ChatGPT, DeepSeek was apparently extremely inexpensive to develop. DeepSeek's AI was apparently trained using reinforcement learning and overtime, was able to learn on its own to generate longer, better responses. When ranked against ChatGPT, DeepSeek scores significantly higher. And that is not good for Silicon Valley giants like Sam Altman and Greg Brockman.
For the past week, tech companies have been trying to figure out how an improved version of ChatGPT was made for a fraction of the cost. DeepSeek was built and trained without the use of the expensive, highly coveted AI chips that the U.S. protects to maintain dominance over other countries in terms of technology. DeepSeek’s creation and success has badly shaken America’s confidence, with President Trump citing its release as a “wake up call” (BBC). Nonetheless, President Trump remains sure that the U.S. will remain a leader in the global world of AI.
Despite the President’s words, the launch of DeepSeek has led to widespread panic as thousands of stocks are sold off, rendering the tech-dominated US stock market unstable. After all, if a better, faster, cheaper version of ChatGPT is now available, how much is the old version worth?