Shocking Chinese AI advancement called DeepSeek sends US stocks down

The world of the technology industry experienced an unexpected shock earlier this week. The Chinese startup DeepSeek, which has only been around for a year, unveiled its groundbreaking artificial intelligence (AI) R1. This model, comparable to ChatGPT from US company OpenAI, is revolutionising the way technology works at a fraction of the cost of giants like OpenAI, Google and Meta. This news has shaken not only the technology industry but also the financial markets.

Unexpected competition at a fraction of the cost

DeepSeek announced that it had spent just $5.6 million to develop the R1 model, an almost negligible amount compared to the billions of dollars invested by US technology companies. According to the Wall Street Journal, this ultra-low price was one of the key factors that stunned analysts and investors. Meta $META, for example, plans to invest $65 billion in AI development this year alone, while OpenAI CEO Sam Altman has said in the past that the entire sector will require…