One might think so from some of the news stories about DeepSeek’s new free Chinese chatbot, announced yesterday at GitHub. At Gizmodo, Lucas Ropek reports,

DeepSeek’s releases have sent shockwaves through the U.S. stock market, and it isn’t difficult to see why. America has increasingly sought to structure its entire economy around the AI industry, and Wall Street has poured billions into the companies selling this technology. Most recently, the Trump administration announced “Stargate,” a $500 billion effort to create “AI infrastructure” by building data centers across the U.S. The gross amount of power and capital that has flowed into the small coterie of tech companies behind this technology is truly obscene. And yet, somehow, a Chinese company that appears to have a smidgeon of Big Tech’s resources was able to create a comparable product in less time and fly to the top of the mobile downloads charts in a matter of weeks.

As such, investors have rushed to sell off tech stocks and a lot of people are saying stuff like “RIP ChatGPT” and “DeepSeek could be an extinction-level event for venture capital firms.”

“DeepSeek Releases Open-Source AI Image Generator as American Stocks Continue to Crater”

That said, AI analyst Gary Marcus offers five insights about what’s going on: Deepseek r1 is not “smarter” than the other bots. It was trained more cheaply but has the same problems with hallucination and reliability. He calls it “an economic revolution, and geopolitical wake-up call” but cautions that it does not bring us any closer to AGI (computers that think like people). What will happen?:

The biggest threat isn’t to Nvidia (people will still need GPUs, albeit fewer higher end ones), but rather to OpenAI and Anthropic (because price wars will undercut their hopes of making a profit). Furthermore, unlike some companies I could name, DeepSeek is actually, well, Open, which may help them lure talent from more walled off operations.

Marcus on AI, January 28, 2025

But never overlook the possibility that some people make a living off panic and many people get off on it.