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Published 17:01 IST, January 29th 2025

Is DeepSeek Doomsday For AI Buildouts? Research Firm Bernstein Decodes

In its latest report, Bernstein raised doubts over reports which cited that DeepSeek built its chatbot for just '$5 million'.

Reported by: Business Desk
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Is DeepSeek Doomsday For AI Buildouts? Research Firm Bernstein Decodes | Image: FreePik

Sell-side research and brokerage firm Bernstein has expressed optimism despite the DeepSeek phenomenon that has wiped out global markets and tech giants. The recent rise of Chinese AI startup DeepSeek has caused massive concern regarding the future of US AI ecosystem, challenging the dominance of the existing players. Despite the rout, however, Bernstein is of the view that DeepSeek's rise may not be a 'doom' for the AI industry at large.

In its latest report, Bernstein raised doubts over reports which cited that DeepSeek built its chatbot for just '$5 million'. While the models themselves are impressive, Bernstein is of the view that DeepSeek’s approach represents a 'miracle' or a dramatic disruption to the AI market.

Is DeepSeek Doomsday For AI Buildouts? Research Firm Bernstein Decodes

The panic surrounding DeepSeek’s cost-effective AI models, Bernstein suggests, may be exaggerated and premature - the firm further said. The report also explains that DeepSeek employed a technique called "distillation" to create smaller, more cost-efficient models by teaching them from a larger model (R1). "This approach has proven successful in terms of performance, especially when compared to OpenAI's smaller models. DeepSeek’s models are reportedly 20-40 times cheaper to use than OpenAI’s, although the company has yet to reveal how it plans to monetize its offerings," the firm said in its report.



DeepSeek Phenomenon: The Future of Open-Source AI Models

Another important point raised by Bernstein is the nature of DeepSeek’s models. The research firm noted that the tech company has made its models open and free for anyone to use, raising questions about the future viability of proprietary versus open-source models in the AI space. Bernstein noted that the open-access nature of DeepSeek’s models could be both a strength and a potential challenge, depending on how the industry evolves.

Bernstein’s Optimistic View


In conclusion, Bernstein acknowledges that while DeepSeek represents an interesting development in the AI field, 'it does not signal the end of established AI infrastructure or a drastic shift in the market'. The firm maintains that the panic surrounding DeepSeek’s breakthrough has been overblown and believes the situation will stabilize as more information becomes available.

Updated 18:15 IST, January 29th 2025