The artificial intelligence revolution is having an “Aha!” moment.
That is how Chinese researchers behind the AI phenomenon DeepSeek described one of the most sophisticated behaviors of their latest AI model. The phrase also sums up what’s happening in global financial markets —and much of the tech sector—on Monday.
In a paper published last week , DeepSeek researchers said their new model would sometimes suddenly stop and realize it should re-evaluate its initial approach to a problem, and reallocate its resources accordingly—something investors are now doing in droves.
DeepSeek’s model is provoking admiration, excitement and fear because it has achieved something that was supposed to be impossible. It is achieving results that some users say are on par with some of the world’s best AI models—but doing so at a far lower cost and without using a large number of cutting-edge chips.
Here’s what you need to know about DeepSeek:
Why am I hearing about DeepSeek now?
DeepSeek is a Chinese AI company, which just a week ago launched its latest AI model, which it calls R1. The company said the model was particularly good at problem solving, performing on par with OpenAI’s o1 reasoning model—but at a fraction of the cost per use. A DeepSeek app is currently top in iPhone download rankings for the U.S.
Why are investors worried about DeepSeek?
The conventional thinking was that AI companies needed expensive, leading-edge computer chips to train the best systems. That has justified huge spending by the biggest U.S. tech companies, such as Alphabet and Meta Platforms, which are sometimes known as hyperscalers.
But DeepSeek didn’t have that financial firepower—and its models are still roughly on par with top U.S. rivals. DeepSeek says it uses less-advanced chips, combined with innovative model-training techniques.
Why is DeepSeek relying on cheaper technology?
It is hard for DeepSeek to buy cutting-edge chips because of U.S. export controls, intended to hinder Chinese organizations from developing innovative AI for military purposes.
Who is behind DeepSeek?
Chinese hedge-fund manager Liang Wenfeng is behind DeepSeek’s development. The business grew out of the AI research unit of his $8 billion hedge-fund firm, High-Flyer.
Is DeepSeek really a disaster for AI stocks?
Not everyone thinks DeepSeek has upended the AI-infrastructure industry. While DeepSeek might have found a way to cut AI training costs, AI demand keeps surging , and tech companies still need more computing power, wrote Stacy Rasgon , a Bernstein semiconductor analyst.
“Is DeepSeek doomsday for AI buildouts?” Rasgon and his colleagues wrote in a report on Monday. “We don’t think so.”
This explanatory article may be periodically updated.