• | 6:30 pm

Chinese startup DeepSeek shakes up AI world, puts US leadership to the test

Buzz about the cost-effective capabilities of the Chinese AI startup DeepSeek's latest AI model that runs on less-advanced chips rocked the AI world

Chinese startup DeepSeek shakes up AI world, puts US leadership to the test
[Source photo: Chetan Jha/Press Insider]

Buzz about the cost-effective capabilities of Chinese artificial intelligence (AI) startup DeepSeek’s latest AI model that runs on less-advanced chips rocked global technology stocks on Monday, putting the spotlight on their rich valuations.

The AI model from DeepSeek, founded by hedge fund manager Liang Wenfeng, was praised by Silicon Valley venture capitalist Marc Andreessen as “one of the most amazing and impressive breakthroughs”.

Released on 20 January, DeepSeek’s R1 has rapidly climbed to the top of Apple Inc.’s App Store rankings, with its users praising its transparency.

The app shows its work and reasoning even as it addresses the user’s written query or prompt.

In tasks such as mathematics, coding and natural language reasoning, the performance of the AI model is comparable to leading models from OpenAI, according to DeepSeek.

The app sparked global attention on how its programmers nearly matched US rivals despite using relatively less-powerful chips, a Wall Street Journal report said on Sunday.

Barrett Woodside, co-founder of San Francisco-based AI hardware company Positron, said he and his colleagues have been abuzz about DeepSeek.

“It’s very cool,” said Woodside, pointing to DeepSeek’s open-source models in which the software code behind the AI model is made available free, the WSJ report said.

DeepSeek’s latest release challenges the notion that Beijing’s AI tech is years behind US counterparts.

While US’s trade curbs kept most cutting-edge chips out of China’s grasp, DeepSeek used open-source technology that is easy to access to build its model.

Shares of the Santa Clara, California-based Nvidia Corp., slid over 10% in premarket trading on Monday, which could become one of the biggest wipeouts of market value for an individual company in history if shares end the session at these levels, Bloomberg reported.

Nasdaq 100 futures tanked about 5% on Monday morning, the biggest intraday drop for the contracts since August, while S&P 500 futures declined 2.4% in New York.

In Europe, tech stocks led market declines as shares of chip equipment maker ASML Holding NV fell as much as 12%.

The Cboe Volatility Index, known as the VIX, spiked.

The Nasdaq 100 and Europe’s Stoxx 600 technology sub-index were together set for a market cap wipeout of $1.2 trillion, if the losses hold, Bloomberg said.

Meanwhile, Chinese AI stocks reacted positively, with Merit Interactive Co., the mainland-listed company most closely linked to DeepSeek, among those rallying.

In Hong Kong, the Hang Seng Tech Index climbed as much as 2% ahead of Lunar New Year holidays this week.

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