Many people talk about deepseek, the Chinese Artificial intelligence (AI) Business Behind Deephink R1, the latest Chatgpt competitor. Deephink R1 is called as capable as Openai’s GPT-01. Deepseek’s model, however, is open source code, charges users a fraction of which openai bills and are reportedly much less than Openai to get their model running.
To put this into perspective, Deepseek team claim They spent only $ 5.58 million on building and educating their model. Compare that to Openai, who has spent billions to train their models so far. These two elements – cost and open access – are why Deepseek seems to be in the middle of each technical conversation that takes place right now and why it has a ripple effect in the US technical market.
Deepseek’s launch leads to market shake-up
Deepseek -Frenese began on Friday 24 January and spread like wildfire. By the end of Sunday, Deepseek had exceeded Chatgpt in Apple (Nasdaq: Aapl) App Store -Ranking for free apps.
But Deepseek not only generated initial bucks; It created a domino effect that is currently in progress. On Monday morning, S&P 500 (Nasdaq: SPX) opened 2%and Nasdaq opened 3%. Why? Because the launch of Deepseek raised questions about the American technology industry. If a foreign company could build something as good as Openai’s GPT-O1 For a small fraction of the cost, it suggests that American technology companies are overvalued and ineffective.
The essence of this issue is the difference in costs. Openai collected $ 5 billion in 2024, but spent $ 8.5 billion and operates its AI models the same year. Deepseek, on the other hand, says they got the job for $ 5.58 million. This means that Openai spent many times more than Deepseek doing to get the same job done effectively.
In addition, Deepseek claims that they run their entire operation of just 10,000 Nvidia (Nasdaq: NVDA) A100 graphics treatment units (GPU), compared to Openai, which has access to hundreds of thousands of superior Nvidia H100 GPUs. This huge difference in costs and expenses makes it difficult not to wonder if US companies are over expenses and raise money for inflated values.
Why developers flock to Deepseek
One reason why Deepseek picked up traction so quickly is that it is open source code. This is very different from the walled garden which is Openai, where virtually all its advanced, unlimited features and tools live behind a Salary. That is why Deepseek begins to emerge as a developer favorite; At Deepseek, developers can access the source code, adapt it, fine-tune it, adapt it to their needs and even run it locally-all without managing restrictive licensing or high costs.
In addition, Deepseek’s pricing for programming programming interfaces (API) is much cheaper than Openai’s, which means that developers, especially those on a budget, can build very capable systems without burning through as much cash as they had to when they worked through Openai: S APIs.
Critics question Deepseek’s claims
But not everyone purchases Deepseek -Hype. Scael Ai CEO Alexandr Wang, for example, has said that it is unlikely that Deepseek spent so little. He believes that they probably have at least 50,000 Nvidia H100 GPUs, which means that their infrastructure costs would be closer to those from smaller US technology companies.
There is also speculation that Deepseek trivializes its costs to avoid US export controls On advanced computer hardware, which is another reason why they have an incentive to hide the actual size and cost of their business. Elon Musk and other industry leaders have supported Wang’s theory, which raises more questions about how much of Deepseek’s story we can actually believe.
Deepseek’s impact
I don’t think this is as big as the headlines do. Yes, Deepseek’s launch raises important questions about the US technology industry – as if companies are overvalued or overcharging for their products (the answer to both questions is yes). It also acts as a clear signal on the market that Us is not the only dominant nation When building AI systems and that US-based companies will need to develop and become more efficient in remaining competitive.
But for the average user, I don’t think Deepseek is a gaming exchange. Most people use Generative AI As a glorious search engine, and for it, Chatgpt or any other existing model works very well. These users will probably not see an urgent need or a reason to switch to a new model like Deepseek as the old models work well for their primary use cases.
On the other hand, developer is another story. They have been very voiced about how much cheaper deepseek is, and for a party that is build an app or service And paying per API call, the cheapest, most capable system is the winner – why this high minority can’t stop talking about Deepseek.
Deepseek and Global AI Race
The bigger picture here is the global race for AI dominance. Deepseek’s launch reminds us of how close the US and China race really is. The United States is often seen as a leader in AI, but Deepseek proves that China is a serious challenger. The consequences are enormous when both countries are pushing to exceed each other in AI development.
But several months ago, Sam Altman, CEO of Openai, made a good point that continues to be true about “new” companies and products: It is easier to copy what a first relocator does than to be the first relocator. There is truth to it – Deepseek did not have to invent everything from the ground up; They could build on what companies Openai had already done.
But that does not mean that the first relocator always wins. Look at browsers. Those who still exist today were not necessarily the first – they were those who made their products more accessible and easier to use. Deepseek can be positioning to do the same by offering an open source code, affordable alternative to the walled gardens that are American AI companies.
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Watch: Demonstrates the potential for blockchains fusion with AI
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