An AI assistant created by Chinese startup DeepSeek became the number one most-downloaded app in Apple’s US App Store over the weekend, sending shock waves through Silicon Valley and causing the price of major tech stocks to plummet. Nvidia saw more than $460 billion erased from its market capitalization on Monday, a drop Bloomberg characterized as the “biggest in US stock market history.”
The shake-up stems from an open source model developed by DeepSeek called R1, which debuted earlier this month. The company said that it rivals the current industry leader: OpenAI’s 01. But what stunned the tech industry most was that DeepSeek claimed to have built its model using only a small fraction of the specialized computer chips that AI companies typically need to develop cutting-edge systems.
On Monday, DeepSeek posted a message on its website saying it was temporarily limiting new registrations due to “large-scale malicious attacks” on the company’s services.
DeepSeek’s R1 model “challenges the notion that Western AI companies hold a significant lead over Chinese ones,” Jack Clark, cofounder of the AI startup Anthropic, wrote in his newsletter. Venture capitalist Marc Andreessen called it “AI’s Sputnik moment.”
Cheng Lu, a research scientist at OpenAI, said DeepSeek’s chatbot demonstrated impressive Chinese conversational skills. “It’s the first time I can feel the beauty of Chinese language created by a chatbot,” he said in an X post on Sunday.
DeepSeek’s AI assistant is currently available for free and comes with three main functions. First, users can ask the chatbot questions and receive direct answers. For example, when WIRED asked for recipe ideas incorporating pomegranate seeds, DeepSeek’s chatbot quickly provided a list of 15 options ranging from yogurt parfaits to a “Middle Eastern-inspired” rice pilaf, but it didn’t cite any specific chefs or recipes.
DeepSeek’s app also has a search mode that surfaces answers from the internet. When WIRED asked, “What are some important news stories today?” DeepSeek’s chatbot cited the Israel-Hamas ceasefire and linked to several Western news outlets such as BBC News, but not all of the stories appeared to be relevant to the topic. Ironically, one was a New York Times story about DeepSeek’s impact on the stock market.
Lastly, there’s a “DeepThink” mode that allows users to tap into DeepSeek’s R1 model, which was built upon the company’s existing V3 model. The difference between the two is that R1 has so-called “reasoning” abilities that allow it to explain step by step how it reached its conclusions. For example, when asked, “What are the most important historical events of the 20th century?” DeepSeek initially provided a long meandering answer that began with a number of broad questions.
“That’s a hundred years, so there’s a lot that happened,” read part of its reply. “I should probably break it down by decades or major themes like wars, political changes, technological advancements, social movements, etc.” DeepSeek’s chatbot then went on to cite World War II, the Cold War, and the Holocaust.
But before R1 could finish its reply, the entire answer disappeared and was replaced by a message that read, “Sorry, I’m not sure how to approach this type of question yet. Let’s chat about math, coding, and logic problems instead!” A number of experts and early adopters have noted that DeepSeek, like other tech platforms that operate in China, appears to extensively censor topics deemed sensitive by the Chinese Communist Party
But despite these limitations, DeepSeek’s free chatbot could pose a serious threat to competitors like OpenAI, which charges $20 per month to access its most powerful AI models. Unlike its Chinese counterpart, OpenAI doesn’t disclose the underlying “weights” of its models, which determine how the AI processes information. It also has declined to make public the full “chains of thought” produced by its own reasoning models.
