The U.S. stock market dropped 1,033.99 points on Jan. 27, which is its largest decline since September 13, 2022; with tech stocks like Nvidia, Google and Microsoft leading the way.
DeepSeek is an Artificial Intelligence technologies startup founded by High-Flyer in 2023, a Chinese stock trading firm with Liang Wenfeng at the head of both High-Flyer and DeepSeek.
In the past couple of years, DeepSeek has released multiple large language models, which is the technology that supports AI chatbots like ChatGPT. Though on Jan. 10, it released its first free chatbot called DeepSeek-V3, similar to ChatGPT and Gemini.
The release of this chatbot sent the stock market into a frenzy, resulting in Nvidia losing nearly $600 billion in market cap, the biggest drop ever by a U.S. company.
The reason for this reaction is because of how DeepSeek created its chatbot and how much it cost them to do so.
Typically companies train their chatbots with supercomputers that use 16,000 chips or more. But DeepSeek only used 2,000 chips.
The chips they used were made by Nvidia. If it turns out that it’s possible to make a chatbot that is on par with chatbots like ChatGPT and Gemini, but use only an eighth of the chips then Nvidia will lose money.
Since late 2022, the belief has been that millions of dollars need to be spent to create a powerful chatbot, which limited what companies could make one, such as companies like OpenAI, Google and Meta.
However, according to the New York Times DeepSeek engineers say they only needed $6 million in computing power to train their chatbot.
The Biden Administration put rules in place to limit the number of chips that could be sold to rival countries such as China.
Owen Daniels can be reached at [email protected]