If you’ve been keeping up with the news regarding emerging technology such as generative artificial intelligence, you’re likely already aware of popular services such as ChatGPT and Meta AI. While these models have been disrupting the tech space for the last few years, one relative newcomer, DeepSeek, has recently made major waves and completely shifted the cultural perspective on the financial and computational requirements of artificial intelligence. Per reports, DeepSeek showcases a nearly identical generative capability when compared to GPT-4o, despite costing a fraction of the price to develop. Within days of hitting the American market, DeepSeek has decimated multiple major stock prices for companies including Nvidia, Microsoft and Meta.
The headline-grabbing service has left investors and general consumers alike scrambling to catch up, asking questions about how this is all possible. Since DeepSeek is receiving such massive attention, now seems like as good a time as any to examine what the Chinese service is, how it operates and how the AI model has impacted the U.S. stock market.
What Is DeepSeek?
Though most Americans have only heard of the Chinese app in the last few days, DeepSeek has actually been around in some capacity since 2023. The Hangzhou, Zhejiang-based company is owned and operated entirely by a Chinese hedge fund, meaning there’s no direct way for new investors to come aboard. Of course, if DeepSeek continues dominating the marketplace, there’s a firm possibility that the business will open itself up to public shares trading. The AI model operates in a very similar capacity to ChatGPT or Meta AI, by responding to complex written prompts with generative information sourced from the web. Users can ask DeepSeek questions, seek personal advice or use the model to construct written arguments with a similar level of accuracy to its competitors.
While the model’s user interface is certainly impressive on its own merit, there are several key details that make DeepSeek a significant disruptor in the international tech space. For starters, its code is entirely open-source, meaning it’s available for everyone to view, modify and adjust, free of charge. Open-source coding makes DeepSeek a premier model for coders and independent web engineers, as it invites them to tinker with the platform to construct their own specialized iterations of the code. DeepSeek co-founder and CEO Liang Wenfeng has actively worked to hire independent researchers from top Chinese universities, as well as a wide variety of young professionals outside of the computer science field. DeepSeek is also said to have been developed for a paltry $6 million, as compared to the more than $100 million required to make OpenAI’s current ChatGPT model.
How Has DeepSeek’s Popularity Impacted The Stock Market?
DeepSeek’s AI chat service was first introduced to the United States on Jan. 10, and rapidly gained popularity with American users. By Jan. 27, the app had been downloaded over 1.6 million times, quickly surpassing ChatGPT and other contemporary tech. Given that the Chinese service was so inexpensive to develop and so instantly popular, investors quickly took notice, pulling funds from popular AI companies and microchip manufacturers. Nvidia took the biggest hit on the New York Stock Exchange, with a plunge of up to 18 percent. Individual Nvidia Corp shares tumbled from $142.02 at close on Friday Jan. 24, to just $117.86 on Monday evening. As a private entity, we have no concrete figures on OpenAI, though inside sources have speculated that department heads at the tech giant are panicking about the success of DeepSeek.
Ironically, one of the key reasons for DeepSeek’s development was the restriction of China’s access to Nvidia chips, among other tech systems. Had the AI platform been developed with tech from the Santa Clara-based company, they would actually be making millions right now. Nvidia wasn’t the only tech giant to feel this hit, of course, as Fox Business reports overall drops of 3.5 percent on the entire Nasdaq Composite, alongside a 2 percent dip on the S&P 500. Likewise, semiconductor company Arm Holdings saw a 9.5 percent drop in shares, while Microsoft dipped by 3.5 percent.
Is DeepSeek Safe To Use?
Like similar AI models, DeepSeek collects a host of user data in order to train its algorithm and offer human-like responses. Though its open source code allows us to see that DeepSeek doesn’t really collect more than ChatGPT, the app’s Chinese ownership does raise security concerns. If you’ve been keeping up with the ongoing threat of the TikTok ban, this operates under the same guidelines, as Chinese-owned servers can be directly accessed by the nation’s government, allowing top Chinese officials to potentially pilfer data from American devices.
Despite this alleged danger, many engineers are seeing the success of DeepSeek as a “Sputnik moment,” highlighting the need for American coders to reduce their computational requirements and do so at significantly lower prices, in order to keep up with emerging technologies. Depending on how OpenAI and similar companies respond to DeepSeek’s success, this could be viewed as a catastrophic failure of American engineering, or the start of a new AI space race.
