Mon, 27 Jan 2025

What is DeepSeek and why did it cause tech stocks to drop?

The Chinese company is making a major splash in AI with the release of its chatbot app in the US.

* A Chinese AI-powered chatbot called DeepSeek has become the most downloaded free app on Apple's store since its release in January.
* The company claims it built the app for $6m, significantly less than the billions spent by US-based AI companies like Nvidia and Meta.
* Experts believe that DeepSeek's low costs are due to the fact that they use cheaper semiconductor chips that are still available to import from China.
* The chatbot has gained popularity in the US, with many users praising its ability to provide helpful and personalized responses.
* However, when asked about a politically sensitive topic (Tiananmen Square), the app replied that it couldn't answer the question due to its programming.
* DeepSeek's success has sent shockwaves through financial markets, causing a 3% drop in the Nasdaq on January 27 and a $600bn loss for Nvidia's market value.
* The company's lower costs have raised questions about the future of America's AI dominance and the need for high-performance chips to advance AI.
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