The Chinese AI company DeepSeek has developed an open-source model called R1. It can match the abilities of advanced chatbots while using fewer computer chips and less power than leading AI companies. This has caused concern among investors in U.S. tech giants like Alphabet, Meta, and OpenAI.
They worry that these companies may not live up to expectations despite their huge investments in AI. On Monday, the stock market fell sharply. Nvidia, which makes chips for AI systems, lost $600 billion in value.
Other chipmakers and semiconductor equipment companies also saw their shares drop. DeepSeek’s achievement is forcing Silicon Valley to rethink its approach to AI development.
DeepSeek’s cost-efficient AI model
Until now, U.S. tech giants believed they could stay ahead by outspending rivals on chips and data centers. However, DeepSeek has shown it’s possible to build powerful AI at a lower cost. This could shift the focus to making models more efficient rather than just more powerful.
Some tech leaders see this as a positive development. They argue that open-source AI will advance the field faster and make the technology more accessible. Meta, for example, has pushed open-source AI with its Llama model.
Despite the short-term challenges, many believe DeepSeek’s breakthrough will ultimately benefit the AI industry. “We thought we had global AI supremacy, when, in fact, we should be celebrating,” said AI consultant Zack Kass. “This is one more piece of evidence that the AI revolution is going to democratize technology and be fairly distributed.”
