What is DeepSeek R1?

DeepSeek is an AI startup that was established in May 2023, focusing on open-source large language models that enable computers to comprehend and produce human language.

The company is supported by High-Flyer, a prominent hedge fund from China, both of which were initiated by Liang Wenfeng in Hangzhou, Zhejiang. Liang Wenfeng is well-known for his contributions to AI advancement and financial investments, boasting a background in computer science and finance. Prior to founding DeepSeek, he dedicated his efforts to gaining expertise in these areas. His position at High-Flyer has provided the financial resources essential for fostering technological innovation at DeepSeek.

DeepSeek's R1 Launch Shook US Stock Market

DeepSeek, a Chinese AI lab, has made waves in the U.S. stock market with its new chatbot, R1. Since its launch on January 20 2025, R1 has quickly gained popularity, causing a decline in Nasdaq 100 futures as Silicon Valley took notice.

Over the weekend, DeepSeek soared to the top of the Apple App Store, and R1 made it into the top 10 on UC Berkeley's Chatbot Arena leaderboard. This rapid ascent has raised concerns among investors regarding the cost-effectiveness of DeepSeek's approach. The startup invested only $5.6 million to develop R1, excluding research and development expenses. In comparison, U.S. companies like OpenAI and Oracle are pouring significant resources into the Stargate AI initiative. This difference in spending has led to what Kathleen Brooks, research director at XTB, describes as an "existential crisis" for U.S. AI leadership. The affordability of DeepSeek's model has sparked worries about the valuations of chip makers, resulting in declines for Nvidia, Broadcom, and AMD stocks during premarket trading.

R1's success is shaking things up for major tech companies that are pouring money into AI. Before the market opened, shares of Microsoft and Alphabet took a hit. The "DeepSeek dip" had a ripple effect, causing declines in Nasdaq 100 contracts and S&P 500 futures as well. With DeepSeek advancing its AI technology, businesses are starting to reconsider their strategies and investments.

DeepSeek Model History

DeepSeek AI has gone through multiple updates, with each one introducing improvements and tackling earlier shortcomings. Below is a comprehensive overview of the main features and challenges of each version.

Additionally, here’s a table summarizing the timeline of DeepSeek AI model releases:

DeepSeek's Journey so Far

DeepSeek has swiftly established itself as a heavyweight in the AI arena, deftly navigating tricky hurdles like US export restrictions on high-tech GPUs. These limitations have spurred the company to get creative, honing in on efficiency and teamwork.

By fine-tuning memory usage and adopting a chain-of-thought strategy, DeepSeek's models tackle complex tasks—think advanced math and coding—without straining the capabilities of less robust GPUs.

To fuel its progress, DeepSeek has cleverly mixed capped-speed GPUs aimed at the Chinese market with a hefty stash of Nvidia A100 chips snagged before the latest sanctions. Word on the street is that the company has at least 10,000 A100s, with some whispers claiming the count could soar to 50,000! This knack for resourcefulness has empowered DeepSeek to keep on pushing the limits of AI technology.

DeepSeek R1 vs. OpenAI ChatGPT o1

While DeepSeek and OpenAI's models may look like twins separated at birth, a few quirky tweaks make them stand out.

Cost Efficiency: R1 is like the budget-friendly option on a restaurant menu, operating at a fraction of the cost, which is a blessing for researchers who feel like they've been living off instant noodles.

Engineering Simplicity: R1 aims to deliver spot-on answers without breaking a sweat on computational power. Dimitris Papailiopoulos from Microsoft's AI Frontiers lab puts it perfectly—it's all about working smarter, not harder!

Open Source Accessibility: In a move that warms the hearts of open-source enthusiasts, DeepSeek has dropped six pint-sized versions of R1, some of which can even run on your grandma's old laptop! This aligns nicely with the growing trend of open-source releases in China.

Together, these features position R1 as a savvy, cost-effective alternative to ChatGPT o1, making advanced AI capabilities available without needing a second mortgage. As DeepSeek continues to innovate, it's clear that hardware limitations can spark some serious creative engineering, potentially flipping the global LLM landscape on its head!

Key Takeaways

1. What is DeepSeek?

   • DeepSeek is an AI startup founded in May 2023, focusing on open-source large language models that allow computers to understand and produce human language.

2. Who founded DeepSeek and what is his background?

   • DeepSeek was founded by Liang Wenfeng in Hangzhou, Zhejiang. He has a strong background in computer science and finance and is also known for his contributions to AI advancement and financial investments.

3. Who supports DeepSeek financially?

   • DeepSeek is supported by High-Flyer, a prominent hedge fund from China, which has provided the necessary financial resources for the company's technological innovations.

4. What is the R1 chatbot, and when was it launched?

   • The R1 chatbot is DeepSeek's flagship product, launched on January 20, 2025. It quickly gained popularity, creating a significant impact on the U.S. stock market.

5. Why did the launch of R1 cause a stir in the stock market?

   • R1's success raised concerns about the cost-effectiveness of AI development, especially when compared to the significant investments made by U.S. companies like OpenAI and Oracle. This led to declines in stock prices for tech companies and broader market index futures.