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Innovation knows no borders, a Chinese AI app called DeepSeek rapidly gains global attention, and it’s giving its competitors a real scare, and the stock market has responded accordingly. Over the weekend, it became the most downloaded app in Apple’s U.S. App Store, overtaking major players like OpenAI. This unexpected rise even caused tech stocks like Nvidia to take a massive hit—$460 billion wiped out, the biggest drop in U.S. stock market history.
Big Tech has long been thought to have an insurmountable lead because of the massive costs required to train and run advanced AI models.
The Budget AI Model That Shocked the Market
The rise of DeepSeek, have shaken the assumption that AI would be dominated by companies with the most resources, the best chips, and the most advanced models.
Smaller companies can now build competitive models without spending billions on computing resources. Now, there’s a growing sense that AI could resemble industries like automobiles or aviation, where competition flourished and much of the value created went to consumers rather than shareholders.
The key driver? Positive feedback loops and scalability, where success leads to more success.
What’s Behind DeepSeek’s Success?
DeepSeek’s success comes from its new AI model, R1, which is shaking up the industry. It’s fast, accurate, and what’s surprising is that it was built with far fewer resources than usual, challenging the idea that companies like OpenAI are way ahead in AI technology.
DeepSeek claims to have developed R1 using a fraction of the specialized chips that most AI companies rely on. R1 was trained at a fraction of the cost, using older, less advanced hardware. Not only that, DeepSeek has also shared enough details about R1 for others to run it independently on their own computers, though not enough to allow full replication.
U.S. Response: Trump Reacts
President Trump expressed confidence that America would remain dominant in the AI space.
Responding to the news aboard Air Force One, President Trump struck an optimistic tone, saying, “If you could do it cheaper, if you could do it [for] less [and] get to the same end result, I think that’s a good thing for us.”
DeepSeek’s Founder: Liang Wenfeng
DeepSeek was founded in 2023 by Liang Wenfeng, a 40-year-old graduate in information and electronic engineering from Hangzhou, China. Liang also founded the hedge fund that backs DeepSeek.
Liang has been a key figure in China’s AI sector. In an interview with The China Academy, Liang expressed surprise at the global reaction to DeepSeek’s pricing strategy, saying, “We were simply following our own pace, calculating costs, and setting prices accordingly.”
R1 was reportedly trained for $6M, far below the billions spent by competitors.
The app itself is free and offers three main features:
- Chatbot Mode: You can ask it questions, and it gives clear answers.
- Search Mode: It pulls information from the internet and provides sources, though it’s not always perfectly relevant.
- DeepThink Mode: This lets users see how the AI reasons step by step to reach its answers, although some responses get cut short—possibly due to censorship rules.
DeepSeek has received praise for its ability to handle Chinese conversations beautifully, but experts have also noticed that it avoids certain politically sensitive topics, likely because of China’s strict internet regulations.
DeepSeek has also faced “large-scale malicious attacks” on its services, forcing the company to temporarily pause new sign-ups.
Still, DeepSeek’s free and powerful app is putting serious pressure on companies like OpenAI, which charges $20/month for its premium services. Moreover, DeepSeek has made its AI model’s open-source.
The AI revolution may end up being more inclusive and competitive than anyone expected.
For consumers, this could mean faster, cheaper, and better AI solutions. For businesses and investors, it’s a wake-up call to prepare for an AI landscape that’s less predictable—and far more dynamic. U.S. President Donald Trump to call it a “wake-up call” for American technology firms.
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