DeepSeek disrupts U.S. tech market with AI model

Kaityn Mills
4 Min Read
DeepSeek disrupts U.S. tech market with AI model

With its low-cost AI model, DeepSeek, a Chinese AI company, has sent shockwaves through the U.S. tech market. The company’s chatbot has quickly become the most downloaded free app on Apple’s U.S. app store, surpassing OpenAI’s ChatGPT. This development has major implications for Silicon Valley.

DeepSeek’s cost-effective models directly threaten the expensive AI technologies funded by American tech giants like Google, Microsoft, Apple, and Meta. These companies have invested billions into advanced AI, sparking an arms race in the industry. On Monday, the market reacted to the rise of DeepSeek.

Nvidia, a leading chip company known for its AI technology, saw its stock drop more than 13% by late morning. Other chip companies, including Arm and Broadcom, also experienced significant declines. By late morning, the tech-heavy Nasdaq fell almost 600 points, or nearly 3%.

Investors are concerned about the long-term sustainability of AI investments. DeepSeek claims it can use less advanced chips to train its models at a lower cost. This questions the competitiveness of the hefty investments made by Big Tech.

In a critical week for the tech sector, four major companies—Meta, Apple, Microsoft, and Tesla—are set to report their quarterly results. Investors are eager for insights on how these companies plan to respond to DeepSeek’s rise and adjust their AI strategies.

DeepSeek challenges U.S. tech giants

Nvidia quickly responded to the shock caused by DeepSeek’s announcement. The company incorporated the DeepSeek R1 model into its Nvidia NIM microservice, which will soon be fully integrated into the Nvidia Enterprise software platform. This move allows developers to access AI models and build applications, potentially driving up the demand for Nvidia’s latest GPUs.

Nvidia also highlighted the importance of high-powered tools for AI inferencing. The company stated, “Inference requires significant numbers of Nvidia GPUs and high-performance networking.” This indicates that despite the performance of lower-powered chips, Nvidia’s premium GPUs remain essential for top-tier results. DeepSeek-R1 is an open model with state-of-the-art reasoning capabilities.

It performs multiple inference passes over a query, using chain-of-thought, consensus, and search methods to generate the best answer. This process, known as test-time scaling, requires significant computing power for real-time inference and higher-quality outputs. The DeepSeek-R1 microservice can deliver up to 3,872 tokens per second on a single NVIDIA HGX H200 system.

Developers can test and experiment with the API, which will soon be available. The microservice simplifies deployments, supporting industry-standard APIs and allowing enterprises to maximize security and data privacy by running it on their preferred accelerated computing infrastructure. Nvidia’s latest architecture will significantly boost test-time scaling on reasoning models like DeepSeek-R1.

The fifth-generation Tensor Cores can deliver up to 20 petaflops of peak FP4 compute performance and a 72-GPU NVLink domain optimized explicitly for inference. Developers can now experience the power of DeepSeek-R1 through the microservice. With these tools, enterprises can deploy the model effortlessly, ensuring they achieve the high efficiency needed for agentic AI systems.

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Kaitlyn covers all things investing. She especially covers rising stocks, investment ideas, and where big investors are putting their money. Born and raised in San Diego, California.