The new challenger from China, DeepSeek, is rapidly causing an imbalance in the artificial intelligence chatbot market. It is going head to head with big players such as OpenAI, Google’s Gemini, and ClaudeAI. This has developed an upheaval within the American domination of generative AI models since DeepSeek rose to become a leader in the given field.
It is the cost-effective nature of DeepSeek that creates differences between the two. The founders of DeepSeek spent just $5.6 million on the development of their AI model, which is a small fraction of what major players such as OpenAI and Google’s Gemini spent on theirs. This affordability has caught the AI industry off guard, especially considering a viral video of OpenAI founder Sam Altman from 2023, where he claimed that building an AI model on a budget of $10 million was “hopeless.” Altman’s comment came after a question about how a small, resource-constrained team could build something substantial in AI. DeepSeek’s chatbot emerged as the top-rated free app on Apple’s US App Store. In a shocking market event, a leading American chipmaker, Nvidia, lost more than $600 billion in valuation in a single day, marking the biggest-ever single-day loss in the history of stock markets.
This is pretty hilarious in retrospect.
In India in 2023, Altman was asked how if a small, smart team with a budget of $10 million could build something substantial within AI.
His reply: “It’s totally hopeless to compete with us on training foundation models” https://t.co/pdYIhV2x1m
— Arnaud Bertrand (@RnaudBertrand) January 28, 2025
DeepSeek gained traction last month when it revealed that its DeepSeek-V3 model required under $6 million in computing power, using Nvidia’s lower-capability H800 chips. The company’s latest model, DeepSeek-R1, launched last week, is touted as 20 to 50 times more affordable to use than OpenAI’s flagship model, o1, depending on the task.
Altman publicly credits DeepSeek and says the performance of the R1 model was astonishing at such a low price point. Success on the part of DeepSeek raises the concern of the American strategy for funding the generative AI, given how the Chinese company refutes the story behind the necessity for huge budgets on AI.
