Everything you need to know about DeepSeek, in plain English

Jan. 27, 2025 — The tech and finance world woke up on Monday morning with a startling realization: The Chinese company DeepSeek had released an AI system that outperformed the leading American-made models at a fraction of the cost.

That realization, which spread over the previous weekend via newsletters and tech media, sent AI-related stocks crashing on Wall Street. Nvidia, Microsoft, Meta—all down significantly.

Marc Andreesen, the tech venture capitalist, called it “AI’s Sputnik moment.”

What is DeepSeek? Why does its success bode ill for AI developers in the United States?

After scouring the usual sources today we found the best all-in-one explainer came from Cade Metz, the New York Times tech reporter based in San Francisco.

We’ll get you started. Per Metz:

DeepSeek is a start-up founded and owned by the Chinese stock trading firm High-Flyer. Its goal is to build A.I. technologies along the lines of OpenAI’s ChatGPT chatbot or Google’s Gemini. By 2021, DeepSeek had acquired thousands of computer chips from the U.S. chipmaker Nvidia, which are a fundamental part of any effort to create powerful A.I. systems.

Why did the market react like this?

When DeepSeek introduced its DeepSeek-V3 model the day after Christmas, it matched the abilities of the best chatbots from U.S. companies like OpenAI and Google. That alone would have been impressive.

But the team behind the new system also revealed a bigger step forward. In a research paper explaining how it built the technology, DeepSeek said it used only a fraction of the computer chips that leading A.I. companies relied on to train their systems.

Read the full New York Times article here. You’ll be glad you did.