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Is the U.S. Falling behind in the global artificial intelligence race? Last month, deepseek, a chinese AI firm, disrupted the tech sector and sent shockwaves through the U.S. Stock market with the release of their newest model, R-1. In the wake of the drop, nvidia a leader in manufacturing the processors used to create AI bots like Chat GTPt, saw its stock fall 17 percent, leading to a loss of almost 600 billion dollars in value.
But what’s so special about deepseek’s model? And why did it tank projections for companies that help build AI? Experts say it’s so impressive because it’s not only able to give responses on par with the latest models from companies like open AI, google or meta, but because it was built at a fraction of the cost, using far less computing power and processors than its competitors.
As a consequence, this led to steep losses on wall street for companies like Nvidia because it shifted the industry outlook. Deepseek’s R-1 model proved that demand for computing resources will likely be far lower than expected in coming years. However, it’s unclear if R-1 would have even been possible to build without using the advances of existing a-i models like Chat GPT to its advantage. Some experts also argue that powerhouse companies like Nvidia are now even more important in order for the U-S to retake the global lead in AI.
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