DeepSeek Shakes Up AI World, Causes Tech Stocks To Plummet

Since the Chinese owned Artificial Intelligence (AI) company DeepSeek released its model, it has made big waves in the AI sector leading to tech stocks plummeting. 

Deepseek is an AI startup founded in 2023 by Liang Wenfeng and it’s based in Hangzhou, China. It is quickly becoming famous for its powerful AI models, rivalling leading players like ChatGPT and Google’s Gemini.

One of its biggest achievements is DeepSeek-R1 which is a very advanced model  but was built with a much smaller budget compared to big AI companies like OpenAI. It cost only Sh723 million ($5.6 million) to develop and used 2,048 Nvidia H800 GPUs. Despite this, it has 671 billion parameters, making it one of the most powerful AI models available.

Quick Success

After its launch, DeepSeek-R1 became a huge success. It quickly reached the number one spot on the U.S. iOS App Store, even surpassing OpenAI’s ChatGPT, which was one of the most popular AI apps before. 

Big companies like Microsoft noticed DeepSeek’s success. They started using its AI models in their own platforms.

DeepSeek is also changing how people see China in the tech world. Initially it was known as the world’s  manufacturing hub but now companies like DeepSeek are showing that China can also be a leader in software and AI.

Recently, DeepSeek faced some challenges. On January 27, 2025, the company limited new user registrations to Chinese mainland phone numbers, email, and Google login after a cyberattack slowed its servers.

DeepSeek's rise has also caused big reactions in the stock market. After its AI app became so popular, shares in major global technology companies fell drastically.

Nvidia's stock dropped by as much as 17–18 per cent while  other companies like Microsoft and Google also saw their stock prices go down.

Also Read: Why Kenya Is Demanding Social Media Companies To Set Up Local Offices

Some experts have expressed concerns about DeepSeek's success warning that the Chinese government could use the AI system for things like spreading false information or spying. DeepSeek says it stores information on servers in China, which is the point of contention when it comes to privacy and security.