Just two weeks after DeepSeek’s initial release on January 10, 2025, the new AI chatbot has been the talk of the world.
Within that short period, the app had become the most downloaded free app on the iOS app store, surpassing Open AI’s ChatGPT, the most popular AI on the market. This sudden increase in popularity caused a huge shock throughout the U.S. tech market.
Nasdaq, which is heavily focused on tech stocks, fell 3.1% on January 27th alone; while Nvidia, an American tech manufacturing company, experienced a whopping 17% drop with nearly 600 billion dollars lost from DeepSeek’s release, marking the greatest single-day drop in market value of a company in U.S. stock market history.
Although new and improved AI models come out every few months, their release comes nowhere close to the widespread attention and fame of DeepSeek.
One reason is because of the cost. AI can be extremely expensive to develop, with AI giants such as OpenAI’s ChatGPT and Google’s Gemini, costing hundreds of millions. On the other hand, DeepSeek took just a fraction of that total—around a mere 5.6 million to bring to the market, according to its developers in a technical report.
However, new research shows that this estimated cost to create DeepSeek is false and the actual amount was closer to over 500 million dollars, undermining several concerns regarding the low development expenses .
Another part of DeepSeek’s fame is their release of an open-source version of their AI software. Open-source software refers to when the original code of a software is made available for anyone on the web to access, modify or redistribute. This allows for further innovation at faster paces and more widespread distribution of the code, though this also raises more security concerns as it increases the risk of exploited vulnerabilities. Although companies such as OpenAI have long-promised an open-source version of ChatGPT, those have never been fulfilled.
The third part of DeepSeek’s impact on America is because it was developed by a Chinese company co-founded in 2023 by Liang Wenfeng. China is currently one of the U.S.’s biggest competitors in the AI market, so the release of the powerful chatbot quickly dispelled the misconception that China was far behind the U.S. in the coming race to AI.
DeepSeek is often called a “Sputnik moment”, referring to the U.S.S.R.’s release of the Sputnik satellite that triggered the beginning of the Space Race between the U.S. and the Soviet Union. The satellite served as a “wake-up” call to many Americans that they were far behind the Soviets in the race to militarize and explore space, eventually leading to billions invested in space technology development and the formation of the N.A.S.A.
Since the initial release, President Trump along with the CEO of OpenAI, SoftBank and the Chairman of Oracle announced an investment of $500 billion into AI through a project called Stargate.
Though the U.S. still leads the globe to dominate the power of AI, the gap is rapidly closing.
