Deepseek

‘AI’s Sputnik Moment’: What’s the Deal with DeepSeek?

Dean Blake
By Dean Blake - News

Published:

Readtime: 5 min

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Depending on the circles you run in, you may have seen some pretty crazy news break earlier this week: Nvidia, the computer hardware enterprise that has been leading the way in creating hardware capable of running the next generation of AI computing, lost around USD$1 trillion on the stock market.

The company, long known for its top-of-the-line graphics cards (GPUs), has noted enormous growth over the past five years, as chip-making rivals Intel and AMD struggle to keep up with Nvidia’s market-leading technology. The Goliath company was viewed as near-unshakable from an economic standpoint, so when its stocks swiftly fell off a cliff, dropping 17 per cent in less than 24 hours, it sent the entire U.S. tech space into disarray. So, what was behind the shock loss?

It turns out the scare was caused by the unexpected arrival of a new challenger in the AI space: DeepSeek, a Chinese tech start-up that is hitting similar benchmarks to some of the most advanced US-made models. What sets DeepSeek apart is that it uses far less computing power, doesn’t require access to Nvidia’s fancy new chips and it’s available to anyone for free.

When it finally entered the mainstream on Monday, DeepSeek quickly became the most downloaded application on app stores. The company eventually needed to slow the intake of new users because of surging demand and a “large-scale malicious attack” that took its website partially offline. Now, the competition is in crisis mode.

DeepSeeking Answers

In simple terms, the U.S. tech sector, which has invested heavily in new market applications and development, believed that it had a massive, potentially insurmountable lead over international rivals when it comes to AI. Most of the space’s major players are based in Silicon Valley, California, and Biden-era export restrictions actively tried to keep that intelligence lead in U.S. hands. High-end American-made chips would no longer be available for Chinese tech brands looking to scale up their operations, which the U.S. assumed would put China’s tech ambitions behind its own.

But, DeepSeek proved it all wrong.

While the app was launched in January, a follow-up research paper was published last week that details the impressive “reasoning” skills DeepSeek’s AI model, R1, is capable of. Additionally, concerning the U.S. stock market, the cost efficiency with which DeepSeek’s lesser V3 model could operate was also a concern.

According to The Daily Aus, DeepSeek’s V3 AI model cost about USD$5.8 million to develop, compared to Meta’s expected investment of USD$65 billion into AI in 2025 alone.

That research paper was released on the same day as U.S. President Donald Trump’s inauguration, which is unlikely to be a coincidence. As Politico pointed out, the ‘wake-up call’ could well have been an attempt to show that American attempts to hold international rivals back would amount to nothing.

Not only does China apparently not need the U.S. market’s more advanced chips, but it can create the same quality of output with less powerful hardware—making the country’s massive investment into its AI sector feel wasteful. All at once, the U.S. tech sector was forced to rethink the gap between itself and China, and investors that have been throwing money into the sector will almost certainly be asking difficult questions.

So, what even is DeepSeek?

Simply put, it’s another large language model (LLM), similar to what Open AI has been putting out into the world with ChatGPT, and what has been getting released into every major phone for the past six months. You can ask it questions, get it to simplify complex data points for you, and do all the other things we’ve seen the likes of Apple, Google and Meta touting as impressive stuff. It also launched ‘Janus Pro’, a model capable of generating images, taking on the Midjourneys of the world.

To be fair to Nvidia, DeepSeek’s models do run on older Nvidia GPUs, which have been stockpiling since before the export ban, but the efficiency with which it does so is what has its competitors spooked. Venture capitalist Marc Andreessen said on X that DeepSeek is “AI’s Sputnik moment,” referring to the beginning of the Cold War space race between the US and Russia in the 1950s.

Is this the beginning of a new Cold War, with AI tech being the battlefield? Potentially, given that DeepSeek’s tech is largely open source and that it essentially published an “instructional manual” on how it did it, according to Toby Walsh, chief scientist at the AI Institute of the University of New South Wales.

Walsh told ABC that DeepSeek’s actions have shown it’s possible for other countries to challenge Silicon Valley’s dominance in AI, “not just in China, but even possibly here in Australia”. DeepSeek is currently available on the iOS and Google Play Store, if you’re interested in checking it out.

Dean Blake

Journalist - Tech, Entertainment & Features

Dean Blake

Dean Blake is Man of Many's Technology, Entertainment and Features journalist. He has vast experience working across online and print journalism, and has played more video games, watched more documentaries, and played more Dungeons & Dragons than he'd care to ...