For two heady years, American artificial intelligence companies looked unstoppable.
Leading AI developers like OpenAI attracted billions in investment by arguing bigger was better: More data, larger models, and more computing power led to more advanced products, like ChatGPT.
Then came DeepSeek.
The Chinese start-up’s AI assistant catapulted to the top of app stores last weekend, after DeepSeek said the AI model behind it rivaled OpenAI’s latest release but was developed at a fraction of the cost, with far less computing power.
The company’s claims and its app’s popularity sparked soul-searching across Washington, Silicon Valley and Wall Street. DeepSeek releases the AI models behind products such as its assistant app for anyone to download, use and modify.
Tech stocks dropped on Monday. Spooked U.S. officials, engineers and investors reconsidered their views on the competitive threat posed by China in AI, and how the United States could stay ahead.
While some Republicans and the Trump administration suggested the answer was to restrain China, prominent tech industry voices said DeepSeek’s ascent showed the benefits of openly sharing AI technology instead of keeping it closely held.
AI is a critical battleground in the U.S.-China rivalry, with leaders and top officials in both nations expecting it to drive economic and military power.
Technologists in the United States and China consider AI to be the next “general purpose technology,” an invention that will reshape society as did the steam engine or computer — minting a new class of business tycoons and dominant corporations along the way.
President Donald Trump acknowledged that the Chinese app had taken the nation by surprise Monday.
“The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win,” he said in Doral, Florida — even as it remained unclear if his plans for further tariffs on China would secure the U.S. AI lead.
AI is a critical battleground in the U.S.-China rivalry, with leaders and top officials in both nations expecting it to drive economic and military power.
