The rise of DeepSeek, the new Chinese ChatGPT, has turned the tech world upside down. With a development budget of just $6 million – a fraction of the hundreds of millions invested by Western companies in similar AI models – DeepSeek has not only set a new standard for cost efficiency but also for transparency and accessibility. The model is fully open-source, meaning anyone with the right hardware can use and modify it offline. This development has not only shaken up the AI industry but also sent ripples through the financial markets.
The Nasdaq Quake
Monday, January 28, 2025, was a day investors will never forget. The tech-heavy Nasdaq (.IXIC) dropped by a staggering 3.1%, partly due to the unexpected rise of DeepSeek. Nvidia, one of the biggest players in the AI hardware market, was the day's biggest loser. Its stock plummeted nearly 17%, marking a record single-day loss in market capitalization for a Wall Street stock, according to LSEG data.
The reason? DeepSeek proves that high-quality AI doesn’t necessarily rely on expensive, closed systems and exclusive hardware. With an open-source model developed at a fraction of the cost, the traditional AI market is being challenged to adapt to a new reality.
Impressive Performance
Despite its modest budget, DeepSeek’s R1 model delivered benchmark test results in January 2025 that are comparable to leading models like OpenAI’s o1. The model excels at tasks such as planning personalized travel itineraries and creating meal plans based on a grocery list – all without noticeable errors.
What makes DeepSeek particularly interesting is its focus on functionalities that add direct value to everyday life. Although the model (still) lacks advanced features like voice mode or image generation – two features ChatGPT does offer – it demonstrates that simplicity and effectiveness often have more impact than an overload of features.
Open-Source: The Future of AI?
The open-source nature of DeepSeek might be its most revolutionary feature. By making the code freely available, the company not only enables developers to adapt and improve the model but also to use it offline. This opens the door to a new generation of AI applications that aren’t dependent on cloud services or expensive subscriptions.
This transparency and cost efficiency have sparked intense discussions about the current economic models in the AI industry. If a high-quality model can be developed for just $6 million, what does that mean for the future of AI development? And how will established companies like OpenAI and Google respond to this disruptive force?
Get Started with DeepSeek
Curious about DeepSeek? You can try the model yourself! Go to chat.deepseek.com to chat with the AI directly. Or, if you have the right hardware, you can download and use the model offline via GitHub.
Do you want to run AI models like DeepSeek locally? With LM Studio, you can easily run LLMs on your own computer. This works on Ubuntu 24.10, as well as Mac and Windows. For installation on Ubuntu 24.10, follow the instructions via our knowledge base (Local LLM on Ubuntu 24.10). If you have the right hardware, you can set this up within an hour. For developers, this also offers API capabilities.
Conclusion
DeepSeek is more than just a new player in the AI market – it’s a wake-up call for the entire industry. With its low cost, open-source nature, and impressive performance, it challenges the status quo and raises questions about how AI is developed and commercialized. Whether you’re an investor, developer, or end-user, one thing is clear: DeepSeek has the potential to change the future of AI forever.
