NAIROBI, Kenya- China’s DeepSeek is making waves with a low-cost alternative that’s catching the tech world’s attention.
The DeepSeek-R1 model, launched last week, claims to be 20 to 50 times cheaper to use than OpenAI’s GPT-4o, depending on the task.
DeepSeek first gained global recognition last month when it revealed that its DeepSeek-V3 model was trained for under $6 million—a fraction of what industry giants like OpenAI, Google, and Anthropic spend.
And it managed to do so using Nvidia’s lower-powered H800 chips, sidestepping the need for cutting-edge compute.
OpenAI CEO Sam Altman acknowledged the achievement, calling DeepSeek’s R1 “impressive” in a post on X (formerly Twitter).
deepseek’s r1 is an impressive model, particularly around what they’re able to deliver for the price. we will obviously deliver much better models and also it’s legit invigorating to have a new competitor! we will pull up some releases.
However, he quickly shifted the focus back to OpenAI’s core belief: more computing power equals better AI.
“But mostly we are excited to continue to execute on our research roadmap and believe more compute is more important now than ever before to succeed at our mission,” Altman said.
but mostly we are excited to continue to execute on our research roadmap and believe more compute is more important now than ever before to succeed at our mission. the world is going to want to use a LOT of ai, and really be quite amazed by the next gen models coming.
His statement underscores OpenAI’s long-standing strategy—scaling up massive AI models with enormous compute resources, a bet that’s fueled its dominance in the industry.
DeepSeek’s emergence has reignited debates about whether AI breakthroughs require billion-dollar investments or if cost-effective alternatives could disrupt the market.
Some investors seem to be reconsidering their bets—on Monday, Nvidia suffered a historic $593 billion single-day market value loss, marking the biggest one-day drop in Wall Street history.
The sharp decline suggests that investors are questioning whether AI hardware and compute-heavy strategies will continue to be the dominant path forward.
Could leaner AI models like DeepSeek’s shift the industry’s trajectory?
DeepSeek’s budget-friendly AI model has certainly made an impact, drawing praise—even if reluctant—from industry leaders like Altman.
But whether cost-efficient AI can truly compete with compute-heavy giants remains to be seen.
