DeepSeek announced on Monday that it is temporarily limiting new user registrations due to “large-scale malicious attacks” on its services. However, existing users will still be able to log in as usual.
DeepSeek’s Meteoric Rise
The Chinese AI startup has rapidly gained attention as a serious rival to OpenAI’s ChatGPT, Google’s Gemini, and other major AI platforms. Earlier on Monday, DeepSeek’s AI Assistant app overtook ChatGPT as the most-downloaded free app on Apple’s App Store in the U.S.
The company’s rapid ascent has fueled investor interest while also triggering a significant sell-off in global tech stocks.
The AI Arms Race Intensifies
DeepSeek was founded in 2023 and has positioned itself at the forefront of AI development. The startup reportedly emerged from a Chinese hedge fund’s AI research division and is focused on developing artificial general intelligence (AGI)—a level of AI that matches or surpasses human intelligence across a wide range of tasks.
R1 Model Disrupts the Industry
DeepSeek’s breakthrough moment came with the release of its R1 reasoning model last week. The model is:
- Open-source, allowing AI developers worldwide to use and refine it.
- Praised for its advanced reasoning capabilities.
- Developed at a fraction of the cost of competing AI models.
Despite U.S. export restrictions on high-performance AI chips to China, DeepSeek successfully trained R1 using alternative methods.
Low-Cost AI Raises Questions
One of the most discussed aspects of DeepSeek’s model is its cost efficiency. According to analysts at Jefferies, a recent version of R1 had an estimated training cost of only $5.6 million, assuming a $2 per hour rental rate for Nvidia H800 GPUs. This is less than 10% of the cost of Meta’s Llama model.
Regardless of the exact figures, industry reports agree that DeepSeek has built a high-performance AI model at a fraction of the cost of competitors like OpenAI, Anthropic, and Google.
Is the AI Bubble About to Burst?
DeepSeek’s rapid success has raised concerns across the AI sector. Investors and analysts are questioning:
- Are multi-billion-dollar AI investments necessary?
- Is the AI industry heading toward a bubble?
- Could DeepSeek’s model signal a shift in how AI is developed and monetized?
As AI valuations skyrocket, DeepSeek’s rise is forcing the industry to reevaluate whether astronomical funding rounds are sustainable or if the AI sector is due for a correction.
Conclusion
DeepSeek’s impact on the AI market has been swift and dramatic, challenging industry norms on development costs and raising concerns about the sustainability of current AI investment trends. As the AI arms race heats up, all eyes are on whether DeepSeek can maintain its momentum—or if the AI industry is heading toward a major shake-up.
