Chinese AI startup DeepSeek has shaken up the global tech industry, and billionaires are paying a huge price for it.
The company’s rapid rise has sent shockwaves through the markets, switching up the US tech stocks and causing significant losses for some of the world’s wealthiest figures.
Founded less than two years ago by 40-year-old entrepreneur Liang Wenfeng, DeepSeek made headlines in January 2025 with the launch of its R1 advanced reasoning model.
A direct competitor to OpenAI’s ChatGPT, DeepSeek’s model has quickly captured the public’s imagination, claiming the No. 1 spot on the App Store and pushing OpenAI’s flagship model down the ranks.
While many were initially sceptical of the startup’s ability to disrupt the entrenched players in the AI space, its swift ascent has left even the most seasoned tech analysts reeling.
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DeepSeek is Cheap
Although other companies like OpenAI and Google spend hundreds of millions, if not billions, of dollars to train and develop their models, DeepSeek has indicated that it spent only $5.6 million to train its latest AI model.
If this is true, this would mark a huge contrast to the industry standard, where the costs for developing a comparable AI system can range anywhere from $100 million to $1 billion.
DeepSeek’s approach has captivated both the public and investors, who see the company as a potential disruptor to the AI market.
The Chinese tech startup, is not only challenging the traditional powerhouses of Silicon Valley but is also forcing US companies to confront the growing influence of Chinese tech firms in the AI race.
At the same time, US President Donald Trump praised Chinese AI startup DeepSeek during a House Republican retreat on Monday, January 27, calling it “a positive development”.
He lauded the company because of the company’s claimed low cost in developing its AI model compared to its American counterparts.
He has said that DeepSeek is a wake-up call for the US.
Why Billionaires Are Losing Money
Although DeepSeek’s model has captured the attention of millions, its sudden rise has come with its consequences.
The announcement of DeepSeek’s app topping the charts was followed by a brutal day for the stock market, especially for companies with huge stakes in the AI and tech sectors.
Shares of major US tech firms like Nvidia, Oracle, and Google took a hit. Nvidia, a company at the forefront of AI infrastructure, saw its stock dip by over 16%.
On the other hand, Oracle and Google experienced declines of 13.8% and 4%, respectively.
The selloff wiped out billions of dollars in market value, including a Ksh3.5 trillion ( $27.6 billion) loss for Oracle’s chairman Larry Ellison and Ksh2.6 trillion ($20.8 billion) for Nvidia CEO Jensen Huang.
Consequently, many of the world’s richest tech billionaire have lost their fortunes, as they are tied to the success of companies like Nvidia and Oracle.
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DeepSeek VS ChatOpen AI
DeepSeek and OpenAI’s ChatGPT are both advanced AI models, but they have differences in their development approach, cost, and market impact.
OpenAI’s ChatGPT has been a leader in the AI space, known for its sophisticated natural language processing capabilities and deep integration with various platforms. However, it comes with a hefty price tag, with costs in the hundreds of millions to billions for model training and infrastructure.
On the other hand, DeepSeek has quickly become a strong competitor with its R1 advanced reasoning model.
What sets DeepSeek apart is its development which costs only $5.6 million, which is cheaper than any other OpenAI.
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