Bianews reported today:

News on January 29: The Chinese AI company DeepSeek has garnered significant attention in recent days.

Last week, the one-year-old startup DeepSeek unveiled an impressive feat: it introduced an AI model named R1, akin to ChatGPT, that boasts similar functionalities but operates at a fraction of the cost of popular AI models from OpenAI, Google, and Meta.

The company claims that the computing power required for its base model cost just $5.6 million, in stark contrast to the hundreds of millions or billions of dollars spent by American companies on AI technology.

This revelation has sparked widespread skepticism about the existence of a substantial market bubble in AI computing power, leading to a steep decline in chip stocks. NVIDIA suffered a $600 billion loss on Monday, partially recovering on Tuesday.

British and American Media in a Frenzy

This groundbreaking result has sent British and American media into a tizzy.

CNN reported that DeepSeek's meteoric rise is sending shockwaves through the AI sector, threatening the U.S. dominance that seemed unassailable just a week ago.

CNN noted that many in Washington are acutely aware of the U.S.'s involvement in an AI arms race, but this race may be closer and potentially much cheaper than previously anticipated.

Meanwhile, the BBC predicted that DeepSeek signifies a potential shift in the center of AI power away from the U.S.

The BBC stated that DeepSeek's ascent to the top of the Apple App Store charts has firmly established its presence in the public eye, shaking the belief that the U.S. will continue to dominate as the global AI superpower. Many already perceive the U.S. AI industry as overvalued, sparking debates about an AI bubble. While this bubble has yet to burst entirely, its structural integrity is undeniably under pressure. Some may interpret DeepSeek's impact as a sign that the center of AI power is shifting eastward, while others believe it may inspire innovators worldwide to develop their own low-cost AI technologies. The multi-billion-dollar investment plans announced by the U.S. may no longer be the gold standard.

NDTV went even further with hyperbolic statements, claiming that the AI chatbot market has a new Chinese entrant competing with giants like OpenAI, Gemini, ClaudeAI, and others, disrupting America's hegemony in AI-based generative chatbot models. DeepSeek, a Chinese alternative to U.S.-made AI models, has swept through the industry.

The Wall Street Journal was relatively more optimistic, believing that DeepSeek will not bring down U.S. AI giants, mainly due to the many unknowns surrounding DeepSeek's claims, including the chips the company can use amidst sanctions.

DeepSeek Challenges Both NVIDIA and Baidu

Not only has DeepSeek dealt a significant blow to NVIDIA in terms of chips and computing power, but it has also garnered praise and attention from figures like Trump and Ultraman. However, before Ultraman's comment, netizens noticed that DeepSeek might have first called into question the stance of Baidu CEO Robin Li.

Baidu was one of the pioneering companies in China to develop large AI models, with its Wenxiaoyan chatbot. In a video interview with 36Kr in March 2023, Li Yanhong stated, "Will China produce another OpenAI? Basically not. OpenAI emerged because major U.S. companies were not optimistic about this direction, but now major Chinese companies are optimistic about large AI models and are pursuing this path. It doesn't make much sense for startups to recreate a ChatGPT. There are immense opportunities in developing applications based on large language models, and there's no need to reinvent the wheel." Two years later, a young quant named Liang Wenfeng challenged giants like OpenAI and Meta with DeepSeek's low-cost large model.

Li Yanhong's warning was premised on the belief that startups cannot compete with large companies in terms of resources and investment, hence the perceived futility of duplicating efforts. However, DeepSeek has just demonstrated the benefits of low-cost large models, achieving similar results at a fraction of the cost. Is it necessary to reinvent the wheel? Apparently, it is. With a cost of just $5.6 million, DeepSeek directly erased trillions of dollars in global tech stock market value overnight, causing tech billionaires to lose $100 billion in wealth and raising global concerns about the high investment in chips and computing power.

Li Yanhong is not alone in this. American netizens soon discovered that OpenAI CEO Sam Altman had made similar remarks.

An old video of Altman went viral online, in which he said, "Building an AI model with a budget of $10 million is hopeless."

When asked at an event in India in 2023 how a small, smart team with a budget of $10 million could make a substantial impact in AI, Altman responded, "It's completely hopeless to compete with us in training base models." Indeed, in recent days, DeepSeek's chatbot has become the highest-rated free app in the U.S. region of the Apple App Store, while the valuation of American chipmaker NVIDIA evaporated by nearly $600 billion in a single day—the largest single-day market value evaporation in market history. Moreover, Altman recently persuaded Trump to invest $500 billion alongside companies like SoftBank to build AI data infrastructure in the U.S., dubbed the Stargate. How can Altman now face Trump after DeepSeek achieved what his $500 billion project aimed to do with just $5.6 million? Altman, however, was quite gracious, praising the R1 model and stating, "DeepSeek's R1 is an impressive model, especially considering the exceptional product they can provide at this price." Trump also acknowledged that DeepSeek serves as a wake-up call for American businesses.

Two years ago, with similar company positions and leaders of comparable stature, Baidu and OpenAI could be considered the leaders in large AI models for China and the U.S., respectively. At that time, the two tech CEOs expressed similar sentiments, likely due to the prohibitive costs involved and the desire to discourage more competitors from entering the large model space, which is understandable.

However, the media and netizens are always curious, and unearthing old stories is one of the media's hallmarks. Let's just laugh it off. Besides, getting slapped in the face is just a small matter compared to the larger impacts. NVIDIA lost $600 billion, and imagine Huang Renxun losing $20 billion in wealth overnight—getting slapped in the face is simply not a priority anymore.

Related Reports:

DeepSeek Hits Global Headlines: Wipes Out Trillions in AI Company Market Value Overnight

DeepSeek Wipes Out $4.3 Trillion in NVIDIA's Market Value Overnight: 17% Plunge Sets Record for Largest Single-Day Market Value Evaporation in U.S. Stocks