US market is losing hair over DeepSeek's (not-so-overnight success) —  what may actually happen

DeepSeek’s arrival in the AI scene rocked the US market, which has been somehow dominating the AI race in recent years. The Chinese company said that it used older Nvidia H100 GPUs to build it with only $6 million to spend, and as a result, it’s something more powerful than OpenAI’s ChatGPT.

But, just how true is that?

A lot of speculative scenarios are being played out, but at least three probable causes might have actually happened behind the curtains.

Analyst Charles Archer predicts three potential explanations for the success: one, reverse-engineering existing open-source AI; two, the Chinese Communist Party-backed funding for these older Nvidia GPUs; or three, how the Chinese AI company innovatively scaled with older hardware.

Now, while all those scenarios may actually happen, especially considering China’s past of overly exaggerating its tech advances, the third is what everyone is excited about and feared at the same time.

What if it’s actually true? That’s Jevon paradox all over again, as Microsoft boss Satya Nadella praised.

DeepSeek’s workforce consists of just around 200 employees, most of them are predominantly younger PhD students from top Chinese colleges with little to no academic or professional experience abroad.

The DeepSeek AI’s launch created some sense of urgency, and the US market is losing hair because of that. At the time of publication, the US stock market lost over a trillion dollars, and the rapidly plummeting trend is most probably not slowing down any time soon.

Andy Yen, the CEO of Proton AG (the company behind ProtonMail encrypted email service), argues that DeepSeek’s success exposes Big Tech’s failure to maintain American dominance in tech in exchange for monopoly protection.

He said that China’s crackdown on domestic Big Tech back in 2020 actually propelled innovation like never before by giving room to smaller, agile companies like DeepSeek to thrive.

“Innovation doesn’t come from gigantic, bloated companies with thousands of middle managers. It comes from agile and nimble small businesses,” he criticizes.