A new player in the artificial intelligence (AI) landscape is capturing attention in app stores worldwide—DeepSeek, a Chinese AI chatbot. Comparable in performance to leading AI assistants across the globe, DeepSeek distinguishes itself by being developed at a fraction of the cost.
Microsoft CEO Satya Nadella expressed admiration for this breakthrough, stating, “We must take developments from China very, very seriously,” during last week’s World Economic Forum in Switzerland. The buzz around DeepSeek is palpable in the AI community. The chatbot, created by a Chinese start-up, reportedly required less than $6 million for training—significantly less than the billions spent by companies like OpenAI on their models.
In the coming years, the United States plans to invest at least $500 billion in AI, as recently announced by President Donald Trump.
A Cost-Free Chatbot with Reasoning Capability
Like other renowned AI chatbots, DeepSeek enables users to have conversations and seek solutions to problems. This Chinese language model performs similarly to ChatGPT o1, a paid version of ChatGPT, but costs nothing to use. Both DeepSeek and ChatGPT o1 use logical steps and control questions to solve queries, allowing users to follow along with their reasoning.
However, DeepSeek offers an advantage by being open-source, allowing companies to run the program on their own systems, potentially reducing the risk of data misuse. Despite its open-source nature, DeepSeek remains secretive about the data used for its training, akin to other AI chatbot developers. Consequently, the specifics of how DeepSeek operates remain vague. Notably, it incorporates well-known Chinese limitations, preventing inquiries about topics such as the 1989 Tiananmen Square protests or China-related geopolitical issues.
Investor Concerns Emerge with DeepSeek’s Arrival
DeepSeek’s launch is causing ripples in Silicon Valley. Major AI tech companies like NVIDIA, Meta, and Microsoft have seen their stock prices fall in recent days. Shares of Dutch chipmaker ASML dropped by 9% in value.
This reaction stems from the realization that AI development might be far less expensive and require fewer computer chips than previously thought. DeepSeek demonstrates China’s active participation in the AI race, despite U.S. efforts to restrict powerful chips from Chinese hands. Yet, skepticism persists regarding the Chinese company’s transparency about the computational power used for its chatbot.
The sudden focus on DeepSeek is attracting widespread attention, with the app ranking highly in European markets, including the Netherlands. However, experts caution users to remain vigilant about data security, given the app’s free nature. There is uncertainty about whether their conversations and data are stored safely.