Artificial intelligence (AI) has become one of the most fiercely competitive fields in the technology industry. While companies like OpenAI (ChatGPT) and Google DeepMind (Gemini) dominate the Western AI market, a new challenger from China – DeepSeek AI – is emerging as a potential threat.
With its highly efficient, low-cost large language model (LLM) and rapid expansion strategy, DeepSeek is attracting not only the attention of the tech world but also that of investors and governments, raising important questions about the future of the global AI market.
What is DeepSeek AI, and Why Does It Matter?
DeepSeek AI is a Chinese AI company founded in 2023 by Liang Wenfeng, an AI expert with years of experience at major tech corporations.
The company focuses on developing large language models (LLMs) with the goal of creating a product comparable to GPT-4 but at a significantly lower cost.
Comparison: DeepSeek AI vs. Competitors
| Criteria | DeepSeek AI | ChatGPT-4 (OpenAI) | Gemini 2.0 (Google) |
| Pricing | Free; affordable API pricing | Free; ChatGPT Plus available for $20/month | Free; Gemini Advanced at $19.99/month (first 2 months free) |
| Processing Performance | Strong in math and programming, but slower response times | Faster processing, especially for complex tasks | Well-integrated with Google Search |
The Impact of DeepSeek AI on the Market
The emergence of a low-cost AI model from the Chinese startup DeepSeek has sent shockwaves through the global financial market. With substantially lower development costs compared to existing models, DeepSeek’s technology poses a significant threat to Western tech companies that have invested billions into AI – ranging from chip manufacturing to massive data center construction.
As a result, U.S. Big Tech stocks saw a massive sell-off on January 27, with Nvidia’s stock plunging nearly 17%, leading to a $600 billion loss in market value – the largest single-day market cap drop in the history of a U.S.-listed stock.
To illustrate this shift, the chart below shows the performance of the “Magnificent 7” compared to the rest of the S&P 500, highlighting the immense pressure on the technology sector.
Risks and Challenges Facing DeepSeek AI
DeepSeek AI is rapidly becoming one of the most disruptive forces in the AI industry. But does it have what it takes to become the “TikTok of AI” as some have speculated?
Countries That Have Banned DeepSeek
Amid increasing geopolitical tensions and concerns over trade and data security, the rise of a Chinese AI model shaking up the market has triggered regulatory scrutiny. Some governments have responded with restrictions or outright bans to mitigate risks associated with DeepSeek.
- South Korea: On February 6, 2025, the South Korean Ministry of National Defense announced that it had blocked DeepSeek from military computers connected to the Internet to ensure information security.
- United States: The House of Representatives’ Chief Administrative Office (CAO) banned the installation and use of DeepSeek on government devices due to concerns about malware risks and data security.
- Italy: On January 28, 2025, the Italian government removed DeepSeek from the App Store and Google Play, citing concerns over potential data leaks affecting millions of citizens.
Regulatory Responses and Challenges
In response to these restrictions, China has strongly opposed the bans, emphasizing that it does not require businesses or individuals to collect or store data illegally.
These developments pose a major challenge for DeepSeek as it attempts to expand and operate in international markets. It also highlights the growing importance of complying with global security and data privacy standards.
Conclusion
“DeepSeek AI has the potential to reshape the AI industry, but investors must closely monitor political and regulatory developments before making any decisions.”
– Daniel Skelly, Head of Strategy at Morgan Stanley
This statement serves as an apt conclusion to our analysis. Objectively speaking, the rise of a new AI disruptor brings both positive and negative implications for the market and industry competition.
- On the positive side, consumers benefit from increased competition in performance, API pricing, and accessibility.
- On the downside, it becomes increasingly difficult to distinguish between AI hype and real, sustainable solutions. Additionally, data security risks and regulatory uncertainty remain significant concerns.
As DeepSeek continues to evolve, will it truly become the next big thing in AI, or will it face insurmountable regulatory roadblocks? The answer remains to be seen.
Risk Disclosure
Securities, Futures, CFDs and other financial products involve high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding your initial investment could incur within a short period of time.
Please make sure you fully understand the risks of trading with the respective financial instrument before engaging in any transactions with us. You should seek independent professional advice if you do not understand the risks explained herein.
Disclaimer
This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it.
The above information should not be used or considered as the basis for any trading decisions or as an invitation to engage in any transaction. Doo Prime does not guarantee the accuracy or completeness of this report and assumes no responsibility for any losses resulting from the use of this report. Do not rely on this report to replace your independent judgment. The market is risky, and investments should be made with caution.
