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Key points China’s DeepSeek and US tech dominance: DeepSeek, a Chinese AI startup, has rapidly gained attention with its advanced models, potentially challenging the dominance of established U.S. tech giants like OpenAI and Nvidia. Cost-effectiveness and open-source strategy: DeepSeek challenges the traditional, capital-intensive AI development approach by using less advanced hardware to create cost-efficient models. Their open-source strategy promotes faster innovation and wider adoption, potentially reducing the competitive edge of U.S. firms that rely on proprietary systems. Investment implications: This development could raise concerns about the high valuations of the U.S. tech sector that has been the key driver of broader U.S. market gains. DeepSeek, a Chinese artificial intelligence (AI) startup, has recently emerged as a significant player in the AI landscape, drawing considerable attention from global investors and industry leaders. Founded in 2023, DeepSeek has rapidly developed advanced AI models that rival those of established U.S. tech giants. DeepSeek unveiled a free, open-source large-language model in late December that it says took only two months and less than $6 million to build, using reduced-capability chips from Nvidia called H800s. DeepSeek’s app is now one of the most downloaded app on Apple’s App Store, and Bloomberg searches for “DeepSeek” have surged, reflecting heightened global interest and investor focus. Count of Bloomberg stories mentioning DeepSeek. Source: Bloomberg This has raised a few pertinent questions, such as: Sustainability of US tech dominance DeepSeek’s AI models, like the DeepSeek-R1, have demonstrated superior performance compared to prominent U.S. models such as OpenAI’s GPT-4 and Meta’s LLaMA 3.1. These achievements span across various benchmarks, including complex problem-solving, mathematics, and coding, positioning DeepSeek as a key player in the global AI arena. Even if DeepSeek does not maintain its current level of popularity, this development serves as a reminder that competition in the global AI arena…

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Filed under: News - @ January 27, 2025 12:26 pm