ChatGPT's New Competitor? Chinese AI Startup DeepSeek On Top Of Apple Appstore - All You Need To Know

A new AI startup from China, DeepSeek, has captured the tech world's attention, emerging as a strong competitor to established players like OpenAI and Meta Platforms Inc.

The company’s AI model is seen as a cost-effective alternative, making waves for its ability to operate on less-advanced chips compared to the cutting-edge hardware of companies like Nvidia.

Founded by quant fund chief Liang Wenfeng, DeepSeek is quickly making its mark with an app that not only answers user prompts but also shows its reasoning behind responses.

This transparency in how the AI works has impressed users and investors alike, with the product climbing to the top of Apple Inc.'s App Store rankings after its release last week.

Marc Andreessen, a prominent investor, hailed the DeepSeek AI as “one of the most amazing and impressive breakthroughs,” emphasizing its potential to challenge the global AI industry. The app's ability to perform at a high level without relying on expensive, advanced chips could reshape the future of AI development, as mentoioned in the report by Bloomberg. 

Disruption in the AI Space: What Does DeepSeek's Success Mean?
DeepSeek’s rise has raised important questions about the future of AI technology. The startup’s success casts doubt on the long-held belief that only companies with massive capital investments, like Nvidia, have the upper hand. The company's model, built using easily accessible open-source technology, could lead to faster evolution and competition in the AI space.

“DeepSeek shows that it is possible to develop powerful AI models that cost less,” said Vey-Sern Ling, managing director at Union Bancaire Privee as mentioned in the report by Bloomberg. “It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers.”

This shift in AI development strategies is also felt in the stock market. As the buzz around DeepSeek grows, tech stocks have seen a significant decline. Nasdaq 100 futures dropped as much as 2.3%, with contracts on the S&P 500 falling 1.2%. Shares of Nvidia, which has long been seen as a leader in AI hardware, dropped over 3%.

The Global Impact on Tech Stocks and Future Competition
DeepSeek’s success has sent shockwaves through the stock market, as investors reconsider the dominance of companies like Nvidia. The AI giant’s supplier, Advantest Corp., saw its shares fall as much as 8.6% in Tokyo, while other AI-related stocks like Mapletree Industrial Trust in Singapore and Merit Interactive in China also experienced declines.

However, the rise of DeepSeek also signals that AI development is no longer solely dependent on Silicon Valley’s heavy investments. "The DeepSeek release raises new doubts, challenging the notion that China’s AI technology is years behind US counterparts," said Charu Chanana, chief investment strategist at Saxo Markets as mentioned in the report by Bloomberg. “While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted.”

As DeepSeek’s influence grows, it could pave the way for faster, more affordable AI advancements that could disrupt the entire industry, making this week’s earnings reports from tech giants like Apple and Microsoft a crucial moment for assessing the future of the sector.

(With Inputs From Bloomberg)