Chinese AI DeepSeek challenges ChatGPT and causes tech stocks to fall, including Tesla
A relatively small Chinese lab, DeepSeek, is making waves in the international Artificial Intelligence race after debuting advancements on its new large language model.
Last week, DeepSeek released its R1 model which has since gone viral. This is causing concerns in the U.S. market, generally seen as the leader in the space, as Chinese prominence is expected to grow.
Moreover, DeepSeek was able to make these advancements despite U.S. export controls that have limited chip availability and, until now, stymied AI advancements in China."
As users flock to the app, financial markets are showing signs of uncertainty as a new phase of the AI gold rush begins to develop. Here's everything you need to know about DeepSeek.
Many across the tech landscape are left both fascinated and startled as a relatively unknown AI company, DeepSeek, has become one of the most talked about companies in the world overnight.
The company, based in Hangzhou, China, is funded and completely owned by the Chinese hedge fund High-Flyer. DeepSeek's flagship product is the R1 model, which has gone viral over the past weekend.
The Chinese company has struck a nerve with U.S. regulators, AI leaders, and stockholders as its rapid progress threatens U.S. dominance in the space. Moreover, it is hard not to draw a connection between potential regulatory concerns and the ongoing social and political debate surrounding Chinese-owned TikTok.
DeepSeek only heightens concerns that technology advancements in the internet and AI era could lead to national security risks.
As of right now, DeepSeek is completely open-source and free to use, unlike U.S. companies like OpenAI, which require subscriptions to access the best models.
According to a statement released by DeepSeek, the R1 model matches or beats similar products from competitors like ChatGPT on most math and reasoning-related tasks.
Since DeepSeek dropped its R1 model, the company's app has become the top free app in the Apple app store — narrowly ahead of ChatGPT and Threads.
Due to tariffs, DeepSeek has been forced to make its models do more with less, enabling the company to create a model that is both less expensive and more efficient.
Bedrocks of bountiful investment portfolios are currently the biggest losers, with Nvidia down 16% at the time of writing. Nvidia has been thriving, consistently capitalizing on the AI boom to become one of the world's most valuable companies.
Additionally, Tesla is down more than 2% today following a month of fluctuating stock prices, with consistent dips over the last 10 days. This is likely due to Tesla positioning itself as a leader in practical AI innovation with products like self-driving cars and robots.
Elon Musk, one of the original founders of OpenAI, may well have cause for concern over his AI startup, xAI.
In addition to individual companies, Nasdaq futures are down 4% and the S&P 500 is down 2%.
Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman. To share additional tips or insights with Salgado, email Bsalgado@gannett.com.
This article originally appeared on Austin American-Statesman: Chinese AI DeepSeek challenges ChatGPT and causes tech stocks to fall
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