Nobody saw this one coming. While Donald Trump was busy hyping a $500 billion AI mega deal for the US, a tiny Chinese startup called DeepSeek quietly rewrote the playbook with just $6 million in funding.
DeepSeek built what ChatGPT does — on a fraction of the budget and infrastructure — and still nailed the accuracy. Venture capitalist Matt Turck nailed the irony:
“Microsoft: ‘We’re good for our $80bn.’
Meta: ‘We’re good for our $65bn.’
DeepSeek: ‘We’re good for our $5.5m.’”
Suddenly, Big Tech’s dominance in the AI race isn’t looking so secure. Even if Microsoft Chairman Satya Nadella didn’t seem too bothered: “As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of.”
Read more: DeepSeek shocker erases over $1 trillion from Big Tech
Is China in the lead?
By the weekend, the unthinkable had sunk in: America might not be leading the AI race anymore. In fact, China might have just taken the lead.
“DeepSeek R1 is AI’s Sputnik moment,” said venture capitalist Marc Andreessen, comparing the breakthrough to the Soviet Union’s launch of the first satellite in 1957 — a moment that left the US scrambling to catch up.
Just five months ago, Kai-Fu Lee, AI guru and former head of Google China, said that while the US will lead in AI breakthroughs, China will be better and faster in engineering. Even if the gap between them now is six months.
Now, Lee, author of AI Superpowers: China, Silicon Valley, and the New World Order, feels vindicated. “Many people simplified that to be ‘China will beat the US.’ And many claimed I was wrong with GenAI,” he said.
Even Perplexity AI’s co-founder, Aravind Srinivas, chimed in: “For a while, it wasn’t clear who would beat ChatGPT for the first time,” before congratulating DeepSeek for going past the American player to become the most downloaded app on the App Store in a matter of days.
Read more: ChatGPT is old news… we’re eyeing $G👀GL
But questions remain
Did it really cost just $6 million? Did DeepSeek use Nvidia chips despite US export bans? And how much of this is quietly backed by the Chinese government?
Founder Liang Wenfeng’s recent appearance alongside Chinese Premier Li Qiang only adds fuel to the speculation.
Oh, and DeepSeek R1 dropped on 20 January — Trump’s inauguration day. Coincidence much?
The fear is palpable. Nvidia’s stock tanked 14% and other Big Tech firms lost about 5%.
Sure, the US remains the infrastructure king for AI chips, and its muscle could pull it back to the top. But the narrative of American exceptionalism in AI just took a massive hit.
Read more: Tell me, ChatGPT: Who’s winning the AI race?
Even Trump’s executive order on AI appeared confusing when it aimed to both “sustain and enhance America’s dominance in AI” but also clear a path for it to “retain leadership in AI.”
Whether DeepSeek is a blip or a sign of China pulling ahead, it is clear that US dominance in AI has never been under this much scrutiny.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
