The tech establishment has long believed that the AI companies with access to the deepest pockets would be able to collect the most data, train the biggest models, and ultimately prevail. But Wall Street and Sand Hill Road were recently caught off guard by the sudden rise of DeepSeek, a lean, open-source AI competitor based in China. DeepSeek’s model rivals the performance of OpenAI’s o1 model—reportedly doing so with just a fraction of the spend by leveraging a few key technical ideas.
Whether or not DeepSeek’s claims ultimately hold up, this latest technology disruption makes one thing clear: The industry’s fixation on scale and spend as hallmarks of innovation and value creation requires recalibration.
