DeepSeek, a Chinese artificial intelligence company, has rapidly emerged as a formidable player in the AI sector following its launch in Hangzhou, China. Founded in July 2023 by Liang Wenfeng and backed by a hedge fund, DeepSeek has gained significant attention for its AI assistant, which operates similarly to ChatGPT. The app has quickly become a sensation, topping the download charts on Apple's store and earning the status of the leading free application in the United States.
The app was introduced to the US market on January 10, as reported by Sensor Tower. Its sudden rise in popularity and lower operational costs compared to US-based AI companies have caused ripples across financial markets. Notably, Nvidia's stock plummeted by over 12% on January 27, raising concerns about competitive pricing pressures from DeepSeek. Researchers have indicated that the development of DeepSeek cost a mere $6 million (£4.8 million), a stark contrast to the estimated $540 million expenditure involved in creating ChatGPT.
The financial impact of DeepSeek's introduction was profound, with the tech-heavy Nasdaq falling by more than 3% on January 27. The app’s cost-effectiveness and performance have led to praise from industry leaders, including Silicon Valley venture capitalist Marc Andreessen, who described DeepSeek as "one of the most amazing and impressive breakthroughs" in the AI field. DeepSeek's models reportedly match the capabilities of leading US-based models, such as ChatGPT, but at a fraction of the cost.
DeepSeek states that its AI application is designed "to answer your questions and enhance your life efficiently." This vision resonates with users who have propelled the app to the top of app store charts. Meanwhile, OpenAI CEO Sam Altman, alongside other leaders, attended a White House event last week where they committed to investing $500 billion (£400 billion) in AI infrastructure development within the United States. This initiative underscores the competitive landscape and the growing emphasis on advancing AI capabilities domestically.