China's cheap ChatGPT lookalike AI start-up haunts City by the Bay

1. China's cheap ChatGPT lookalike AI start-up haunts City by the Bay

China's cheap ChatGPT lookalike AI start-up haunts City by the Bay ByTuhin Das Mahapatra Jan 27, 2025 09:04 PM IST Share Via Copy Link China's AI start-up DeepSeek's launch triggered a $1 trillion market drop, as it overtook ChatGPT as the top free app.

Big tech companies are reeling after Chinese start-up DeepSeek unleashed a market meltdown with the launch of its groundbreaking AI technology. Since its inception in 2023 in Hangzhou, DeepSeek has become a disruptor that transformed the market within just twelve months.

Deepseek and OpenAI logos are seen in this illustration taken January 27, 2025. REUTERS/Dado Ruvic/Illustration(REUTERS)

Within hours of the debut of DeepSeek’s free AI Assistant, which it claims is cheaper and more efficient than existing models, nearly $1 trillion was wiped from global stocks.

The AI breakthrough erupted first on Monday as DeepSeek's free AI joined the US Apple Store, becoming the top free app despite OpenAI’s ChatGPT already being available.

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Tech giants like Nvidia, Oracle and Palantir experienced substantial share value reductions after the release. Pre-market trading started with a 10% decline for Nvidia while Oracle shares shed 8% value as Palantir stock lost 7%. Nasdaq 100 futures took an over 4% hit while the S&P 500 lost 2%.

Marc Andreessen, a Silicon Valley venture capitalist, called it AI’s “Sputnik moment,” comparing it to the Soviet Union’s launch of the first satellite in the late 1950s. “DeepSeek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen—and as open source, a profound gift to the world,” Andreessen wrote on X.

DeepSeek’s models, including the R1 and V3, reportedly rival or surpass leading Western AI systems, even while relying on inferior hardware. The company claims to have trained its V3 model with just over 2,000 Nvidia H800 chips—contrasting the tens of thousands typically required by competitors—at a cost of under $6 million.

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“If there truly has been a breakthrough in the cost to train models from $100 million+ to this alleged $6 million number, this is very positive for productivity and AI end users,” said Jon Withaar, senior portfolio manager at Pictet Asset Management, per Reuters.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, cited to Reuters, “The idea that the most cutting-edge technologies in America, like Nvidia and ChatGPT, are the most superior globally—there's concern that this perspective might start to change.”