Why is Deepseek shaking up the AI world?

DeepSeek AI, a low-cost Chinese artificial intelligence (AI) model, is making waves worldwide. Its innovative design allows it to compete with top AI models at a much lower cost. The app has already surpassed rivals like ChatGPT to become the most downloaded free app in the US. Ahead of the US market opening on Monday, shares of AI-related tech giants like Nvidia, Microsoft, and Meta saw a decline, as reported by the BBC.

Founded in 2021 by hedge fund manager Liang Wenfeng, this Hangzhou-based startup has shaken up the global stock market. DeepSeek’s key advantage lies in its ability to operate efficiently with fewer advanced chips, significantly reducing development costs compared to industry leaders like OpenAI. This has sent ripples through the tech world, leading to Nvidia’s market value plummeting by nearly $600 billion (£482 billion) in a single day—the largest one-day loss in US history.

In response to DeepSeek’s rise, former US President Donald Trump called it a “wake-up call” for American industries. “The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win,” the American president said.