DeepSeek’s AI Chatbot Shakes Up the Industry, Challenging Nvidia’s Dominance

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Written By Mae Nelson

Scientific writer

In a move that has sent shockwaves through the tech industry, a chatbot made by Chinese artificial intelligence startup DeepSeek has rocketed to the top of Apple’s App Store charts in the US, dethroning OpenAI’s ChatGPT as the most downloaded free app. This unexpected surge in popularity comes on the heels of DeepSeek’s release of its new R1 reasoning model, designed for solving complex problems and reportedly performing on par with OpenAI’s o1 on certain benchmarks.

DeepSeek’s Cost-Effective Approach to AI Training

DeepSeek’s eponymous AI assistant is powered by the company’s open-source models, which, according to DeepSeek’s claims, can be trained at a fraction of the cost using far fewer chips than the world’s leading models. The company asserts that its V3 LLM, released in December, is on par with GPT-4o and Anthropic’s Claude 3.5 Sonnet, but cost less than $6 million to develop. In contrast, OpenAI CEO Sam Altman has said that GPT-4 cost over $100 million to train.

DeepSeek also claims to have needed only about 2,000 specialized chips from Nvidia to train V3, compared to the 16,000 or more required to train leading models, according to the New York Times. These unverified claims are leading developers and investors to question the compute-intensive approach favored by the world’s leading AI companies.

Challenging the Status Quo and Navigating Trade Restrictions

If DeepSeek’s claims are true, it means that their engineers had to get creative in the face of trade restrictions meant to ensure US domination of AI. This development has sent shares for Nvidia, the biggest global supplier of advanced AI chips, down over 12 percent in pre-market trading, as investors and analysts question the wisdom of the massive investments being made by Nvidia, Microsoft, OpenAI, and Meta into AI data centers – $500 billion alone for the Stargate Project, of which $100 billion is thought to be earmarked for Nvidia.

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The market value of US AI companies is taking a tumble, as DeepSeek’s apparent success in developing a cost-effective and efficient approach to AI training challenges the conventional wisdom and established practices of industry giants. As developers and investors grapple with the implications of these developments, the AI landscape may be poised for a significant shift.

Original Source: https://www.theverge.com/2025/1/27/24352801/deepseek-ai-chatbot-chatgpt-ios-app-store