A Chinese-made artificial intelligence (AI) model called DeepSeek has taken the tech world by surprise, rapidly climbing to the top of Apple Store downloads and shaking up the AI landscape.
Its latest version, released on January 20, has impressed AI experts and investors alike, sparking significant discussions about its potential and implications for the global AI race.
What Makes DeepSeek Stand Out?
DeepSeek has gained attention due to its ability to rival industry-leading AI models like those from OpenAI while reportedly being developed at a fraction of the cost.
Unlike models that rely on vast numbers of advanced chips, DeepSeek has been designed to function efficiently with fewer resources, making it both cost-effective and highly competitive.
The AI industry has long been dominated by companies that invest billions into high-performance chips and extensive computational infrastructure.
However, DeepSeek challenges this notion, demonstrating that cutting-edge AI can be developed with more economical computing strategies. This revelation sent shockwaves through the stock market, particularly affecting Nvidia, which saw a record-breaking single-day loss in market value.

OpenAI vs. DeepSeek
DeepSeek represents the latest challenge to OpenAI, which established itself as an industry leader with the debut of ChatGPT in 2022. OpenAI has helped push the generative AI industry forward with its GPT family of models, as well as its o1 class of reasoning models.
While the two companies are both developing generative AI large language models (LLMs), they have different approaches:
Feature | OpenAI | DeepSeek |
Founding Year | 2015 | 2023 |
Headquarters | San Francisco, Calif. | Hangzhou, China |
Development Focus | Broad AI capabilities | Efficient, open-source models |
Key Models | GPT-4o, o1 | DeepSeek-V3, DeepSeek-R1 |
Specialized Models | DALL-E (image generation), Whisper (speech recognition) | DeepSeek Coder (coding), Janus Pro (vision model) |
API Pricing (per million tokens) | o1: $15 (input), $60 (output) | DeepSeek-R1: $0.55 (input), $2.19 (output) |
Open Source Policy | Limited | Mostly open-source |
Training Approach | Supervised and instruction-based fine-tuning | Reinforcement learning |
Development Cost | Hundreds of millions of dollars for o1 (estimated) | Less than $6 million for DeepSeek-R1, according to the company |

Training Innovations in DeepSeek
DeepSeek uses a different approach to train its R1 models than OpenAI. The training required less time, fewer AI accelerators, and lower costs.
DeepSeek wants to achieve artificial general intelligence, with advancements in reasoning capabilities representing significant progress in AI development.
In a research paper, DeepSeek outlined multiple innovations developed as part of the R1 model, including:
- Reinforcement Learning: DeepSeek employed large-scale reinforcement learning focused on reasoning tasks.
- Reward Engineering: A rule-based reward system was developed to outperform traditional neural reward models.
- Distillation: Efficient knowledge transfer techniques were used to compress model capabilities into as small as 1.5 billion parameters.
- Emergent Behavior Network: The discovery that complex reasoning patterns naturally develop through reinforcement learning without explicit programming.
DeepSeek’s Large Language Models
Since its creation in 2023, DeepSeek has released several generative AI models, continuously improving their capabilities and performance:
- DeepSeek Coder (Nov 2023): First open-source model designed for coding-related tasks.
- DeepSeek LLM (Dec 2023): General-purpose language model.
- DeepSeek-V2 (May 2024): Enhanced version with improved efficiency.
- DeepSeek-Coder-V2 (July 2024): 236 billion-parameter model with a 128,000-token context window for complex coding challenges.
- DeepSeek-V3 (Dec 2024): Mixture-of-experts model with 671 billion parameters and a 128,000-token context window.
- DeepSeek-R1 (Jan 2025): Advanced reasoning model competing with OpenAI’s o1 at a significantly lower cost.
- Janus-Pro-7B (Jan 2025): Vision model for image understanding and generation.

Why DeepSeek is Raising Alarms in the U.S.
DeepSeek’s emergence has triggered concerns in the U.S., leading to a stock market sell-off. Interestingly, on January 27, 2025, the Nasdaq Composite dropped by 3.4% at market opening, with Nvidia suffering a 17% decline, losing approximately $600 billion in market capitalization.
Key reasons why DeepSeek is raising alarms:
- Cost Disruption: DeepSeek developed its R1 model for under $6 million, challenging U.S. firms that invest billions in AI.
- Technical Achievement Despite Restrictions: China’s AI development is advancing despite U.S. export bans on high-performance AI chips.
- Business Model Threat: DeepSeek’s open-source approach challenges the proprietary, subscription-based models of U.S. AI firms.
- Geopolitical Concerns: DeepSeek’s success is seen as a challenge to U.S. technological dominance in AI, with some comparing it to a modern-day Sputnik moment.

DeepSeek Cyberattack and Data Exposure
DeepSeek’s rise has also attracted cyber threats. On January 27, 2025, the company reported large-scale malicious attacks, forcing it to temporarily limit new user registrations. Plus, the attack coincided with DeepSeek’s AI assistant surpassing ChatGPT as the top downloaded app on the Apple App Store.
Additionally, a security report on January 29, 2025, revealed that a publicly accessible DeepSeek database had exposed sensitive data, including chat history, API keys, and operational details. DeepSeek promptly took the database offline after being informed, but the duration of exposure remains unclear.

China’s Reaction to DeepSeek’s Success
Within China, DeepSeek is being celebrated as a significant milestone in technological self-sufficiency.
While the Chinese government has not officially commented, state media has framed it as a challenge to Silicon Valley’s dominance. Some experts caution that this success could lead to increased tech isolationism, limiting international collaboration.
What’s Next for DeepSeek?
As DeepSeek gains traction, its future remains uncertain. Will it continue to push the boundaries of AI efficiency and challenge the dominance of Western tech firms? How will U.S. policymakers and businesses respond to its rapid rise?
So, one thing is clear: DeepSeek has not only demonstrated China’s ability to innovate in AI but has also reshaped global discussions about the future of artificial intelligence. Its impact will be closely watched as the race for AI supremacy continues to unfold.