DeepSeek's sudden explosion just changed the AI game

For the last few years, a few names have dominated the AI space. Big guns like OpenAI, Google and Adobe have owned the conversation since 2023, so it's no surprise that the industry is a little, well, surprised, to see a new contender turning heads. Seemingly out of nowhere, DeepSeek is apparently causing consternation for everyone from OpenAI to NVIDIA.

DeepSeek has been quietly impressing the AI community for a couple of years, but it's suddenly exploded into the mainstream with the release of its R1 model (not to be confused with the Rabbit R1), which it claims to have a performance on a par with OpenAI’s o1 model. Not only is DeepSeek suddenly top of global app store charts, but it's also caused US tech firms' stock to crash, and OpenAI to promise 'better models' in response.

Based in Hangzhou, China, DeepSeek appears to be challenging the received wisdom that AI requires billions of dollars of computing infrastructure. According to the Guardian, NVIDIA lost $600bn in market valuation on Monday. "Nvidia is one of the companies that has gained most from the AI boom. It went from being a maker of graphics cards for video games to being the dominant maker of chips to the voraciously hungry AI industry... tech companies looking sideways at DeepSeek are likely wondering whether they now need to buy as many of Nvidia’s tools."

What's more, a clearly spooked OpenAI has also pledged to create "better model" in response to what it calls "invigorating" competition from DeepSeek.

As for DeepSeek R1, the model itself has users impressed. "from my experience, DeepSeek R1 is about the same or better (in some contexts) than OpenAI's o1," one Redditor comments, while another adds, "As a chatgpt plus subscriber I have recently exclusively been using R1. I tried using both and until chat gets an update R1 is my go to for literally everything." And then there's the cost. At 1/50th of the cost of OpenAI's O1, R1 currently feels like a steal.

This certainly feels like a disruptive moment in the AI race. Even Donald Trump has called the advent of R1 a "wake-up call", and Nvidia's stock market fall is the biggest in US history. For users, access to a cheaper and more efficient AI model could mean more choice, taking the power away from the AI giants and opening the door for smaller players. But aside from the threat to the US industry, it's not all good news. DeepSeek has already proven itself unwilling to engage with controversial moments from Chinese history. It seems that even if the industry is given a shake-up, the question of AI bias is far from over.