DeepSeek's low-cost AI tool R1 surpasses ChatGPT, prompting major market shifts and raising questions about the future of AI development.
For a fraction of the cost, Chinese startup DeepSeek's free, open-source artificial intelligence is outcompeting the world’s previous leading AI model, OpenAI’s ChatGPT, upending the financial predictions of Silicon Valley and causing major turmoil in the U.S. stock market. This comes just after President Trump announced a $500 billion private sector investment plan to boost AI infrastructure in the United States and amid the threat of a major trade war between the U.S. and China.
DeepSeek's success is a major disruption to the dominant “Silicon Valley model” of technological development, which has heavily relied on proprietary data and private investment — and contributed to the rise of a tech oligarchy with increasing influence over the state.DeepSeek's new, low-cost AI tool R1 has surged to the top of Apple’s App store, overtaking OpenAI’s ChatGPT. Meanwhile, artificial intelligence giant Nvidia lost almost $600 billion in value Tuesday, the biggest single-day loss for a public company. In December, DeepSeek said its model only took two months and less than $6 million to build, despite U.S. restrictions on chip exports to China — a tiny fraction of the cost that U.S. tech giants have spent on AI. Just last week, President Trump announced Stargate, a $500 billion project, to boost AI infrastructure in the U.S., and he promised it would create new jobs.Ramesh Srinivasan, professor of information studies at UCLA, host of the podcast, believes that DeepSeek’s success is an example of the power of open-source collaboration. He explains that innovation isn't just about pouring money into resources but about being resourceful. DeepSeek’s models were trained and refined using open-source content, getting input from communities of developers all around the world. This approach allowed them to achieve results comparable to, if not exceeding, ChatGPT's previous versions, for a fraction of the cost. This breakthrough is causing significant volatility in Silicon Valley as the traditional model of proprietary platforms and data is challenged. Srinivasan also points out the concerning trend of increasing alignment between the Trump administration and tech oligarchs, highlighting the concentration of power and the need for vigilance to ensure that AI systems benefit everyone, not just a select few
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