Chinese AI startup DeepSeek shakes tech market

DeepSeek's R1 chatbot, claims to outperform OpenAI's ChatGPT 4.0 on multiple benchmarks while being more cost-efficient due to lower data and computing power needs

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New Delhi: Nvidia lost nearly AUD 1 trillion (USD 600 billion) in market value overnight, as DeepSeek, a little-known Chinese startup, made waves with its R1 chatbot, reportedly surpassing US competitors in performance while being more affordable to develop. 

This dramatic shift caused major drops in the stock prices of tech giants like Microsoft, Alphabet, and Amazon, who are heavily invested in AI tools such as ChatGPT and Gemini.

DeepSeek’s R1, which became the top free app on the Apple App Store, has rattled investor expectations. The AI model is claimed to outperform rivals like OpenAI’s ChatGPT 4.0 on several benchmarks while operating at a fraction of the cost due to its lower data and computing power requirements. The model's development bypassed US export bans on chips, further intensifying concerns around the competitiveness of US tech products.

Founded in 2023 by the Chinese hedge fund High Flyer, DeepSeek’s R1 chatbot utilises a highly efficient model, drawing attention for its unexpected performance leap. With a focus on large language models (LLMs), DeepSeek’s entry into the AI market signals a potential disruption that threatens to erode the competitive advantage of established US firms.

Despite the excitement, concerns have emerged regarding data privacy, intellectual property, and censorship, particularly given DeepSeek's ties to the Chinese government and its adherence to Communist Party values in the chatbot's responses. These factors have led investors to recalibrate their expectations about the future of AI, with some fearing a geopolitical shift in the market's dynamics.

As AI development continues to evolve, it remains uncertain whether this market shakeup is a passing panic or a sign of a new era in technology. What’s clear is that DeepSeek’s emergence is reshaping the AI landscape, forcing US tech leaders to reevaluate their strategies in a rapidly shifting market.

AI ChatGPT Nvidia OpenAI chatbot
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