DeepSeek App "Earthquake"... What is it and why did it bring down US stocks?

US AI stocks have crashed as a new “monster” from China has taken the world by storm in the first hours of its launch.

What is DeepSeek?

DeepSeek is a Chinese artificial intelligence (AI) company based in Hangzhou that emerged two years ago from a university startup.

Its stated goal is to create artificial general intelligence, a term that refers to human-level intelligence that no technology company has yet achieved.

DeepSeek’s computer scientists took a different approach to building their AI model, resulting in it costing less to run than its US competitors.

What is the app model that people are talking about?

It’s the DeepSeek AI app that has caught people’s attention a lot right now because it says its performance is on par with OpenAI’s model, which was released to ChatGPT users in December.
DeepSeek became the most popular free app downloaded on Apple's App Store in the UK and elsewhere.

There are plenty of AI models available from OpenAI, Google, Meta, and others. What's special about DeepSeek?

This model uses a different type of internal architecture that requires less memory usage, thus significantly reducing the computational costs of each search or interaction with a chatbot-style system.

Researchers have praised it for its ability to handle complex reasoning tasks, especially in mathematics and programming, and it appears to produce results similar to competitors with a fraction of the computing power.

The app also offers ChatGPT's high-end features, which require a financial subscription, for free.
Who is behind the company?

The main character is Liang Wenfeng, who used to run a Chinese quantitative hedge fund that now funds DeepSeek.

In a rare interview, he said: “For many years, Chinese companies have been accustomed to others doing technological innovation, but this will not continue forever. We believe that as the economy develops, China should gradually become a leading country in artificial intelligence.”

Why did US tech stocks fall?

Hundreds of billions of dollars were wiped off the shares of major tech companies after news of DeepSeek’s impressive performance broke over the weekend.

Nvidia, the leader in graphics processing units, saw huge losses, more than doubling the market value of a company like Coca-Cola, for example, in a single day, followed by other companies affected by the series of shocks. On the other hand, companies like Apple benefited from positive expectations related to lower training costs, adding another dimension to the divergence in the market response to this unexpected development.

The timing was important, as US tech companies have pledged hundreds of billions of dollars to invest in artificial intelligence in recent days, while the Chinese company revealed that the investment could be much lower and produce advanced results, which has dampened confidence in US stocks.