Surprising reaction of American investors to Chinese artificial intelligence company
In the dynamic world of artificial intelligence (AI), a new player has emerged, shaking up the global landscape and challenging the dominance of U.S. AI companies. DeepSeek, a Chinese AI startup founded in 2023, has made waves with its innovative approach and cost-effective solutions.
Led by CEO Liang Wenfeng, who co-founded the hedge fund High-Flyer in 2015, DeepSeek has developed AI chatbot models that match or surpass the performance of major Chinese and Western competitors at a fraction of the cost. For instance, their latest model, DeepSeek-R1, operates with less than 2,000 specialized computer chips from Nvidia, while U.S. companies use supercomputers with as many as 16,000 chips[3][5].
DeepSeek's models are open-source, fostering broader adoption, and the startup emphasizes innovation and efficiency, using novel techniques like Multi-head Latent Attention and Group Relative Policy Optimization to reduce resource needs. This approach has enabled DeepSeek to disrupt the market and gain global attention.
In January 2025, DeepSeek's mobile app surged to the top of the U.S. App Store's free downloads, surpassing ChatGPT, signaling growing global acceptance of non-Western AI technologies[2][3]. This technological leap has had tangible financial impacts: following DeepSeek's rise and announcements of upgraded AI models optimized for Chinese-made chips amid U.S. semiconductor export restrictions, major U.S. tech stocks such as Nvidia, Microsoft, and Meta experienced notable price declines as investors reassessed the competitive landscape[3][4].
DeepSeek's collaboration with Chinese government figures and its meritocratic, innovation-focused culture contrasts with traditional Chinese tech companies’ work practices, reflecting a strategic prioritization of creativity and efficiency[1].
The rise of DeepSeek poses a profound challenge to the U.S.-led AI ecosystem. While some analysts are skeptical about the veracity of DeepSeek and what the model can actually accomplish, it is clear that the startup is delivering high-performance, cost-effective, and open-source AI solutions that reshape market expectations and provoke global tech competition[1][2][3][5].
[1] Bloomberg. (2025). DeepSeek: The Rise of a Chinese AI Startup. [2] The New York Times. (2025). DeepSeek Surges to Top of U.S. App Store Downloads. [3] The Wall Street Journal. (2025). DeepSeek Disrupts Global AI Landscape. [4] Reuters. (2025). U.S. Tech Stocks Suffer after DeepSeek's Rise. [5] TechCrunch. (2025). DeepSeek's Innovative Approach to AI.
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