- DeepSeek overtook ChatGPT as the top free app on Apple’s App Store, sparking panic in tech markets and AI sectors.
- U.S. tech giants like Meta and Microsoft are scrambling to respond to DeepSeek’s rapid rise and open-source dominance.
- President Trump announced a $100 billion AI initiative, “Stargate,” to strengthen U.S. leadership in AI and counter China’s advancements.
On Monday, Chinese AI startup DeepSeek made waves by overtaking OpenAI’s ChatGPT as the most-downloaded free app in the U.S. on Apple’s App Store. This sudden rise to the top rattled global tech markets, with major companies losing billions in market cap. The frenzy, fueled by DeepSeek’s rapid success, highlights the growing competitiveness of the AI arms race.
Later the same day, DeepSeek announced it would temporarily limit new user registrations due to “large-scale malicious attacks,” though existing users could continue accessing its services without interruption.
What’s Behind DeepSeek’s Meteoric Rise?
Founded in 2023 by Liang Wenfeng, a co-founder of AI-focused hedge fund High-Flyer, DeepSeek emerged from the fund’s research division with a mission to achieve artificial general intelligence (AGI). Its reasoning model, R1, has gained praise for its open-source nature and performance—putting it on par with or ahead of U.S.-developed models like OpenAI’s GPT series.
DeepSeek’s R1 was reportedly built at a fraction of the cost of rival models, with training expenses estimated at just $5.6 million, far less than Meta’s Llama or OpenAI’s GPT. Despite U.S. export restrictions on advanced chips to China, DeepSeek’s progress has defied expectations, creating a storm of speculation around its impact on the AI sector.
Market Shock and Broader Implications
The ripple effects of DeepSeek’s rise weren’t limited to AI enthusiasts. Tech stocks took a beating—Nvidia shares fell 16%, ASML dropped 7%, and the Nasdaq slid over 3%. AI-focused tokens in the crypto market also plummeted, with many losing between 20% and 70% of their value.
Meta, feeling the heat, reportedly set up multiple “war rooms” to respond to DeepSeek’s growing dominance. Meanwhile, Microsoft CEO Satya Nadella called the situation a “Jevons paradox,” emphasizing how advancements in AI only fuel demand. OpenAI CEO Sam Altman chimed in, likening the situation to a revolution that “cannot be stopped.”
Trump Administration Bets Big on AI
In response to this upheaval, President Donald Trump announced a joint venture with OpenAI, Oracle, and SoftBank to bolster U.S. AI infrastructure. Dubbed “Stargate,” the initiative includes a $100 billion initial investment, with plans to grow that to $500 billion over four years. Key partners include Microsoft, Nvidia, Oracle, and semiconductor company Arm.
Trump’s administration is also backing AI innovation with policies that tie crypto and AI sectors together, signaling a clear intent to keep the U.S. competitive in this rapidly evolving field.
DeepSeek’s rapid ascent underscores the shifting power dynamics in AI, raising questions about the sustainability of U.S. dominance in the field. With open-source technology leading the charge, the race for AGI has never been more intense—or uncertain.
