A surge of interest in the AI chatbot developed by the Chinese startup DeepSeek is disrupting stock markets and igniting discussions about the U. S. -China rivalry in AI technology development. DeepSeek's AI assistant topped Apple’s iPhone app downloads on Monday, driven by curiosity as it emerged as a competitor to ChatGPT. This raises concerns among U. S. tech industry watchers that DeepSeek may have matched American firms in generative AI capabilities at a much lower investment level. Despite this hype, some analysts, like Bernstein's Stacy Rasgon, caution against overreacting, stating that DeepSeek's innovations are not groundbreaking and are part of a broader landscape of existing technologies. Founded in 2023 in Hangzhou, China, DeepSeek claims that its latest models use Nvidia’s less advanced H800 chips, suggesting that high-end hardware isn't necessary for leading AI research. DeepSeek gained traction after announcing a new model that demonstrated comparable performance to U. S. counterparts while being more cost-effective. A recent research paper discussing DeepSeek's R1 model and its advanced reasoning capabilities sparked significant investor concern, particularly regarding its pricing. This frenzy has also highlighted a crucial debate within the U. S. about how to respond to China's advancements in AI. Venture capitalist Marc Andreessen referred to DeepSeek’s progress as AI’s “Sputnik moment, ” echoing fears that U. S.

regulatory actions could stifle American innovation while allowing Chinese firms to advance. Some experts believe that the timing of DeepSeek's announcements serves a political purpose, challenging U. S. export controls on AI technology. Former President Trump viewed DeepSeek's achievement as a positive sign, suggesting it could lead to cost-effective development in the U. S. AI sector. Conversely, Nvidia’s stock fell by 17%, even as the company recognized the significance of DeepSeek’s advancements. What sets DeepSeek apart from companies like OpenAI is its open-source model, allowing wider access for modification. Its R1 model has garnered attention for demonstrating a method of reasoning that enhances its learning capabilities. This has led some observers to reconsider the perception that U. S. companies like OpenAI are unassailable leaders in the AI landscape, with DeepSeek making remarkable strides in a short timeframe.