DeepSeek, a Chinese AI startup, has emerged as a formidable competitor to American tech giants, raising doubts about the dominance of U.S. AI companies and triggering a sell-off in the U.S. tech sector.
DeepSeek, a Chinese AI startup, has sent shockwaves through the U.S. technology sector, raising questions about the billions of dollars invested in artificial intelligence by American tech giants. The company's highly competitive and surprisingly cost-effective models, particularly its reasoning model R1, have outperformed OpenAI's latest offerings in numerous third-party tests.
DeepSeek, founded in May 2023 by Liang Wenfeng, who partly funded it through his AI-powered hedge fund, launched a free, open-source large language model in late December. On January 20th, the Hangzhou-based company unveiled R1, a reasoning model that demonstrated superior performance compared to OpenAI's o1 in many independent evaluations. DeepSeek distinguishes itself from competitors by emphasizing reasoning capabilities, meaning its model first generates a series of logical steps before delivering the final answer.This emergence has fueled investor concerns about the dominance of American AI companies. DeepSeek's competitive prowess, especially its reported possession of a significant number of Nvidia's H100 chips, despite U.S. restrictions on advanced chip sales to China, has raised eyebrows. The company's rapid ascent, highlighted by its mobile app's surge to the top of Apple's App Store download charts in the U.S., surpassing even OpenAI's ChatGPT, poses a tangible challenge to the established players. This unexpected development has led to a significant downturn in the tech-heavy Nasdaq Composite, with major tech companies experiencing substantial losses.
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