Shakeout in the AI Industry due to Entry of DeepSeek

At the time when most of the top technology companies were basking in the aftermath of the ambitious $500 billion Stargate project announced by US President Donald Trump after taking over the Oval Office, the lesser know Chinese company DeepSeek launched a new generation of AI models that compete with the ones developed by US Big Tech, but at a fraction of the cost, taking the world by storm.

The DeepSeek app clocked more than a million downloads on Google’s Play Store for Android phones and AppStore within a two-day period, showcasing the excitement it generated post launch.

Enthusiasm around DeepSeek triggered a riot on Nasdaq as top tech giants in AI space saw market capitalisation eroding substantially, close to the announcement, in early trades. Nvidia fell sharply by 13% and stock of companies like Oracle Corporation and Microsoft also fell substantially.

According to market analyst, DeepSeek outperformed other AI models on most parameters like cost of training, access to hardware, capability, and availability, however DeepSeek is careful about its responses on China.  For instance, in response to a question from this writer on a list of challenges, including human rights ones, facing China, it maintained a -“Sorry, that’s beyond my current scope. Let’s talk about something else.”

DeepSeek claims to have spent around $5.5 million to train its model, delivering the same results that took companies like Google, OpenAI, Meta and others, hundreds of millions of dollars in investments to achieve.

Clearly the AI space is becoming exciting and we are likely to see more products in generative AI space in the days to come from countries like India and China.