DeepSeek’s R1 model stuns US rivals as Altman hails it ‘impressive’
This photo illustration shows the DeepSeek app on a mobile phone in Beijing on Jan. 27, 2025. Chinese firm DeepSeek's artificial intelligence chatbot has soared to the top of the Apple Store's download charts, stunning industry insiders and analysts with its ability to match its US competitors. (AFP Photo)
Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Trump on the same day.
However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.
What truly rattled the industry was DeepSeek’s claim that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.
Sam Altman: Deepseek’s R1 model is impressive
OpenAI chief executive Sam Altman on Monday praised the recent debut of Chinese rival DeepSeek’s latest artificial intelligence model, saying that it was “invigorating to have a new competitor.”
In a social media post, Altman called DeepSeek’s R1 “an impressive model, particularly around what they’re able to deliver for the price.”
Trump: A wake-up call
Trump reacted quickly on Monday, saying the DeepSeek release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”
He argued that it could be a “positive” for US tech giants, adding: “Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution.”
David Sacks, Trump’s AI advisor and prominent tech investor, said DeepSeek’s success justified the White House’s decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development.
The regulations “would have hamstrung American AI companies without any guarantee that China would follow suit,” Sacks wrote on X.
Nvidia fuels optimism yet loses $600B in market cap
US chipmaker Nvidia led a tech stock sell-off on Monday following the emergence of DeepSeek, which could challenge American dominance in the fast-growing AI industry. Nvidia’s shares, which play a critical role in powering AI advancements, dropped nearly 17% on Wall Street, wiping out nearly $600 billion in market cap—the worst performance in the company’s history.
The tech-rich Nasdaq index finished down more than 3%. Shares in another US chip maker, Broadcom, fell 17.4% while Dutch firm ASML, which makes the machines used to build semiconductors, saw its stock tumble 6.7%.
However, Nvidia welcomed DeepSeek as a significant development and opportunity for the company. An Nvidia spokesperson praised DeepSeek’s work for demonstrating how new models can be created using this technique, utilizing widely available models and computing resources that comply with export regulations. Speaking to CNBC, the spokesperson described the model as “an excellent AI advancement and a perfect example of Test Time Scaling.”
The official emphasized that inference—the process of feeding inputs into a trained model to generate outputs like images, text, or video and make accurate predictions—requires a large number of Nvidia GPUs and high-performance networking. “We now recognize three scaling laws: pre-training and post-training, which remain ongoing, along with the newly introduced test-time scaling,” he explained.
Microsoft CEO: Jevons paradox
Microsoft CEO Satya Nadella shared on social media just hours before the market opened that more affordable AI benefits everyone, referencing Jevons paradox, which states that increasing efficiency in resource use leads to higher overall consumption rather than reduction, aligning with Nvidia’s official stance.
At the World Economic Forum in Davos last week, he already had cautioned that advancements coming from China should be taken very seriously. Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.
DeepSeek’s AI chatbot
The chatbot developed by DeepSeek, a startup based in the eastern Chinese city of Hangzhou, has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies.
DeepSeek chatbot became the top-rated free application on Apple’s US App Store, said it spent only $5.6 million developing its model.
The application, which integrates its open-source reasoning model “R1” into a chatbot, had gained significant attention in the global tech community for delivering higher performance at a much lower cost compared to the “o1” model from US-based AI company OpenAI.
On the other hand, Chinese developer DeepSeek announced on Monday that it has halted new user registrations for its AI tool due to cyberattacks targeting its website. The restriction applies only to the AI tool’s web-based chatbot and application programming interface (API) service, while its mobile application remains active in China and other countries worldwide.
