On January 27, 2025, technology stocks, particularly those associated with artificial intelligence, experienced significant declines following claims from Chinese startup DeepSeek regarding its recent advancements in AI technology. The company's assertions have raised concerns about the competitive landscape for U.S. firms heavily invested in AI.
Shares of major companies including Nvidia, Microsoft, and Meta fell sharply in early trading, leading to a notable drop in the tech-heavy Nasdaq index. The downturn is attributed to DeepSeek's introduction of its advanced large language AI model, which reportedly rivals those of leading U.S. competitors like OpenAI, despite DeepSeek's lower investment and resource usage.
DeepSeek's AI Assistant app, launched on January 10, has surpassed ChatGPT to become the top-rated free application on Apple's App Store, further solidifying the company's rising profile in the tech community.
The AI sector has been characterized by volatility, and analysts suggest that the latest market shifts are directly linked to DeepSeek's claims. Despite the turmoil, some experts caution against viewing DeepSeek as a definitive threat to U.S. AI solutions, emphasizing the need for further evaluation of its impact on the industry.
DeepSeek's model, known as R1, has drawn attention for its claimed development costs, purportedly amounting to just $5.6 million for training a model with over 600 billion parameters. This figure has raised skepticism among analysts regarding the potential support the company may have received from the Chinese government.
Liang Wenfeng, founder of DeepSeek, has gained recognition in China, having been invited to a meeting with Premier Li Qiang alongside other prominent entrepreneurs. The company's rapid ascent suggests it could emerge as a significant player in the AI sector, although uncertainty remains regarding the broader implications of its breakthrough.