The recent launch of DeepSeek, a low-cost AI chatbot developed in China, has sent shockwaves through the US technology market. The app, released last week, has surpassed rivals such as ChatGPT to become the most downloaded free app in the United States. Its emergence has caused steep declines in the stock prices of several major US tech firms. Nvidia, the leading AI chipmaker, saw its value plunge by over 16%, erasing more than $500 billion in market capitalization. Microsoft, Tesla, and Alphabet also experienced significant losses.
DeepSeek’s appeal lies in its efficiency and cost-effectiveness. Developed for approximately $6 million using open-source technology and existing hardware, it challenges the notion that massive financial investment is necessary for AI innovation. Its sudden success has raised questions about the sustainability of high-cost AI ventures in Silicon Valley.
However, concerns about data privacy and the geopolitical implications of a Chinese-made app remain prominent. While there is no evidence of improper data use, experts warn that these concerns are unlikely to dissipate amid ongoing tensions between the US and China.
DeepSeek’s launch comes as the US doubles down on AI development, with initiatives like the $500 billion Stargate project led by OpenAI, Oracle, and SoftBank. Despite these efforts, the rise of a low-cost alternative like DeepSeek suggests a potential shift in the global AI landscape, with lower-cost models poised to challenge industry giants.
