A Chinese AI company, DeepSeek, is making waves in the tech world by offering high-performing AI models at a fraction of the cost of its U.S. counterparts. Founded in 2023 by Liang Wenfeng, a former hedge fund chief, DeepSeek has quickly gained attention for its open-source models and a unique reasoning feature that explains its thought process before delivering answers. Its mobile app has already topped iPhone charts in major markets like the U.S., UK, and China.

Wall Street analysts are buzzing about the implications. Some suggest DeepSeek’s approach could disrupt the massive infrastructure spending plans of tech giants like Meta and Microsoft, each committing over $60 billion this year. Jefferies, for instance, warns that DeepSeek’s efficiency “punctures some of the capex euphoria,” potentially slowing down data center revenue growth. Meanwhile, Citi questions whether DeepSeek achieved its results without advanced GPUs, while Goldman Sachs sees a broader shift in competition, with startups gaining an edge due to lower entry barriers.

The debate isn’t just about costs. Bernstein notes that while DeepSeek’s innovations are impressive, they’re not miraculous. They argue that efficiency gains like these are necessary for AI’s continued progress, and increased accessibility could drive even higher demand. Morgan Stanley adds that if advanced AI models can run on smaller devices, it could boost demand for related hardware like chips.

DeepSeek’s rise also highlights China’s growing influence in AI, despite U.S. chip restrictions. Analysts believe this could push Chinese firms to innovate faster, potentially reshaping the global AI landscape. As the competition heats up, one thing is clear: the race for AI dominance is far from over, and DeepSeek is a name to watch.

We’ll keep you updated as more reactions pour in. Stay tuned!