A Chinese artificial intelligence company, DeepSeek, has emerged as a game-changer in the US tech market, surpassing major competitors like ChatGPT, Google’s Gemini, and Anthropic’s Claude AI. DeepSeek’s app has become the most downloaded free application in the US, sparking a seismic shift in the AI landscape and sending ripples through financial markets.

Founded in July 2023 in Hangzhou, China, DeepSeek released its groundbreaking AI assistant app in the US on January 10, 2025. According to analytics firm Sensor Tower, the app quickly climbed to the top of the download charts and earned the highest ratings on Apple’s App Store. Despite reports of some users encountering sign-up issues, its widespread adoption highlights its popularity and performance.

The app, powered by DeepSeek’s open-source AI model, DeepSeek-V3, is designed to mimic human reasoning and deliver responses with enhanced contextual understanding. Unlike many of its competitors, DeepSeek’s app offers unlimited free usage, making advanced AI accessible to a broader audience.

DeepSeek’s development costs have become a point of fascination. The company claims to have trained its DeepSeek-V3 model using Nvidia’s H800 chips, spending less than $6 million – a stark contrast to the billions invested by rivals like OpenAI. This claim has raised questions about the necessity of hefty budgets and cutting-edge chips for AI advancement.

DeepSeek’s meteoric rise is credited to Liang Wenfeng, a 40-year-old information and electronic engineering graduate who partially funded the company through his hedge fund. Liang’s strategic acquisition of approximately 50,000 Nvidia A100 chips, despite US export restrictions on advanced semiconductors, enabled DeepSeek to achieve its breakthrough by pairing these chips with more affordable alternatives.

Liang was recently seen attending a meeting with Chinese Premier Li Qiang, further underscoring the significance of DeepSeek’s achievements on a national and global scale.

The release of DeepSeek’s app has rattled financial markets. On January 27, the tech-heavy Nasdaq index fell by more than 3% in a sell-off that hit chipmakers and data center companies worldwide. Nvidia suffered the most, losing nearly $600 billion in market value in a single day, marking the largest one-day drop in US corporate history. Its stock price plunged 17%, pushing Nvidia from the top spot of the world’s most valuable companies to third place, behind Apple and Microsoft.

Despite the turmoil, analysts have noted that demand for AI technologies remains robust, and the sell-off could be an overreaction. Angelo Zino, a senior equity analyst at CFRA Research, emphasized the long-term growth potential of the AI sector, even as Wall Street assesses the implications of cost-efficient competitors like DeepSeek.

DeepSeek’s ascent comes amid escalating tensions between the US and China over technological dominance. The US has imposed export controls on advanced semiconductors to limit China’s AI capabilities, but DeepSeek’s success underscores the limitations of these measures. The company’s reliance on less advanced chips highlights a shift in the AI development paradigm, challenging the belief that only top-tier resources can drive innovation.

DeepSeek’s app directly competes with leading AI platforms like OpenAI’s ChatGPT, Anthropic’s Claude, and Google’s Gemini. While many of these systems require paid subscriptions or impose usage limits, DeepSeek’s open-source, free-to-use model has set a new benchmark for accessibility and affordability in the AI industry.

Marc Andreessen, a prominent Silicon Valley venture capitalist, has called DeepSeek “one of the most amazing and impressive breakthroughs” in AI. As the app gains traction, questions about the future of US dominance in artificial intelligence are growing louder.

As DeepSeek continues to disrupt the tech landscape, its success raises critical questions about the sustainability of Silicon Valley’s high-cost approach to AI innovation. With its cost-efficient, open-source model, DeepSeek has proven that transformative advancements are possible outside the traditional framework of big budgets and state-of-the-art infrastructure.

For now, all eyes are on the global AI race, as companies and governments grapple with the implications of DeepSeek’s rise and the shifting balance of technological power.