Marketing With AI - Issue 25 - February 2025
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[BREAKING] A shocking Chinese AI advancement called DeepSeek has rocked the AI world…
DeepSeek’s Low-Cost AI Model Rocks the Tech World
Things got a little wild in the markets this week, all because of a one-year-old Chinese AI startup called DeepSeek. Investors were caught by surprise when DeepSeek announced its new AI model, R1, which not only rivals ChatGPT in capability but also costs a fraction of what American tech giants spend to power their models.
Here’s the scoop:
Market Shock: On Monday, US tech stocks took a dive. Nvidia, a major player in AI computing, saw nearly $600 billion of its market value wiped out. The Nasdaq fell by 3.1%, and the S&P 500 sank 1.5%. Surprisingly, the Dow managed to stay in positive territory, up 0.7%.
Staggering Cost Difference: DeepSeek spent just $5.6 million on computing for R1 - which is peanuts compared to the billions that OpenAI, Google, and Meta pour into their AI infrastructures. It’s an eye-popping figure, especially given the high cost of AI training using powerful hardware.
Low-Powered Chips, High-Powered Results: The US has been restricting sales of top-tier AI chips to China for national security reasons. Yet, DeepSeek managed to achieve these results using underpowered chips, making its accomplishment all the more remarkable.
Industry Heavyweights React: Sam Altman, CEO of OpenAI, has long argued that the AI world needs trillions of dollars in investment to secure enough specialized chips. Marc Andreessen, the famous venture capitalist, praised DeepSeek on X (formerly Twitter), calling it “one of the most amazing and impressive breakthroughs I’ve ever seen.”
Why Entrepreneurs Should Care: New entrants can still move fast and break things, even when competing with deep-pocketed powerhouses. DeepSeek’s success is a reminder that groundbreaking tech can come from anywhere. It also raises questions: if a startup can pull off an AI model at a fraction of the cost, what does that mean for the broader market, and for your startup’s technology strategies?
For entrepreneurs exploring AI solutions, DeepSeek’s story underscores the importance of cost efficiency, creative problem-solving, and talent.
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