OpenAI CEO Sam Altman has called Chinese startup DeepSeek’s R1 model “impressive,” highlighting its ability to deliver advanced AI performance at a fraction of the cost. According to DeepSeek, its R1 model is 20 to 50 times cheaper to use than OpenAI’s own models, offering significant affordability without sacrificing quality.
Chinese AI, DeepSeek gained global recognition last month when it revealed that training its DeepSeek-V3 model required less than $6 million in computing resources, leveraging lower-cost Nvidia H800 chips. In contrast, Altman noted that OpenAI remains committed to prioritising increased computing power, suggesting this as an important factor in achieving AI progress.
The emergence of DeepSeek has disrupted the AI industry, leading to a significant sell-off in tech stocks, including Nvidia, which recorded a historic single-day loss of $593 billion in market value. Analysts say DeepSeek’s cost-efficient approach raises doubts about the necessity of the massive financial investments made by US tech firms in AI development.
As DeepSeek continues to attract attention, the startup’s success underscores a shift in the AI market, with low-cost models challenging traditional notions of progress in AI.
Chinese AI startup DeepSeek has announced that its Janus-Pro-7B model has surpassed competitors, including OpenAI’s DALL-E 3 and Stability AI’s Stable Diffusion, in benchmark rankings for text-to-image generation. This achievement solidifies DeepSeek’s reputation as a key player in the rapidly evolving AI market.
According to a technical report, the Janus-Pro model builds upon its predecessor by incorporating enhanced training processes, higher-quality data, and advanced scaling, resulting in improved stability and more detailed image outputs. The company credited the inclusion of 72 million high-quality synthetic images, combined with real-world data, for the model’s superior performance.
This success follows the launch of DeepSeek’s new AI assistant based on the DeepSeek-V3 model, which has become the top-rated free app in the US Apple App Store. The news sent shockwaves through the tech industry, leading to declines in shares of companies like Nvidia and Oracle, as investors reassessed the competitive dynamics in AI development.
OpenAI and Stability AI have yet to comment on the claims. DeepSeek’s achievements highlight the growing influence of Chinese firms in cutting-edge AI innovation, setting the stage for heightened competition in the global tech market.
Microsoft’s upcoming quarterly forecast will reveal whether its significant investments in AI, including its partnership with OpenAI, drive growth in its key Azure cloud business. Despite earlier optimism, Azure’s growth has slowed for two consecutive quarters, and investors are anxious about Microsoft’s ability to monetise AI. The company has committed about $80 billion in capital spending this year, but doubts linger over the effectiveness of its strategy, especially after a sharp drop in stock price following the launch of a competitive AI model by Chinese startup DeepSeek.
Azure, which contributes around a third of Microsoft’s revenue, is expected to show 31.8% growth in the second quarter, a slight slowdown from the previous quarter. Microsoft’s relationship with OpenAI remains a key growth driver, with Azure set to handle much of OpenAI’s cloud traffic. However, investor sentiment has soured, with growing concerns about AI monetisation, margins, and capital expenditure. Microsoft also faces the impact of a stronger dollar, which could hurt its international earnings.
In addition to Azure, Microsoft is banking on the success of its Microsoft 365 Copilot AI assistant, but adoption has been slower than anticipated. To stimulate demand, the company has adjusted its pricing, adding AI features to lower-tier Microsoft 365 plans. While the Copilot’s potential remains high, analysts project a modest penetration rate of 10%, suggesting it could add significant revenue in the coming years. Despite these challenges, Microsoft’s productivity division, which includes 365 Copilot and LinkedIn, is expected to see continued growth.
Overall, Microsoft is forecasted to report slower growth for the second quarter, with revenue expected to rise by 10.9% compared to 16% in the first quarter. Net profit is also projected to increase at a slower pace, raising questions about whether the company’s AI investments will pay off as anticipated.
The launch of DeepSeek’s cost-efficient AI model has sent shockwaves through Australian tech markets, with shares in AI-related companies experiencing steep declines. Investors are increasingly worried that the Chinese startup’s affordable technology could undermine the dominance of established players in the sector.
Among the biggest losers were AI software firm Appen, which saw its stock drop by 3.3%, and chipmaker Brainchip, which lost 10.3%. The technology sub-index fell by 1%, with major data centre operators also taking a hit. Analysts expressed concerns that DeepSeek’s success might reduce demand for AI infrastructure, which had driven heavy investments in Australian data centres.
DeepSeek’s AI assistant, launched last week, has already outpaced US competitor ChatGPT in downloads on Apple’s App Store. This rapid rise has sent ripples through the global tech sector, contributing to Nvidia’s record $592.7 billion market loss.
As Australian investors reassess their exposure to AI stocks, market strategists predict a shift towards safer sectors such as healthcare and consumer staples, after DeepSeek’s disruptive impact.
Retail investors made a record purchase of Nvidia shares on Monday, buying a net $562.2 million worth of stock, following a sharp 17% drop in its market value. The decline came after concerns arose over a low-cost AI model from Chinese startup DeepSeek, which contributed to Nvidia losing $593 billion in market value. According to Vanda Research, this marked the largest retail investment in Nvidia since data tracking began in 2014.
Nvidia has seen steady retail investment over the past few years, with approximately $7.3 billion in shares purchased last quarter. However, this was nearly half the amount recorded in the peak quarter of September 2024.
While global tech stocks showed some recovery on Tuesday, the sector remains under pressure as investors grapple with concerns over the high valuations and dominance of AI leaders like Nvidia, amid rising competition from new players like DeepSeek.
SAP anticipates growing demand for its AI services as energy-efficient models become more accessible. The company’s CEO, Christian Klein, stated that advancements like China’s DeepSeek model signal a shift toward scalable AI infrastructure, which is crucial for running general AI systems effectively.
Klein emphasised the increasing competition in the AI landscape, suggesting that the market will feature multiple large language models rather than dominance by a single player. He noted these developments as positive for SAP’s position in the industry.
Despite recent volatility in technology stocks triggered by concerns over the profitability of AI investments, SAP remains optimistic. The potential of cheaper and more efficient AI systems could reinvigorate confidence in the sector, benefiting companies with robust AI offerings.
Google Maps will rename the Gulf of Mexico as the ‘Gulf of America’ for users in the United States, reflecting an official update to the US Geographic Names System. However, users in Mexico will continue to see the original name, while others worldwide will view both names side by side. Alphabet’s Google confirmed the change on social media, highlighting its standard practice of adapting location labels based on recent regional naming disputes.
The name change stems from an executive order signed by US President Donald Trump hours after taking office on 20 January, as part of his pledge to prioritise nationalist symbolism. Alongside this decision, Trump restored the name of North America’s highest peak, Denali, to its previous designation of Mount McKinley. These actions have reignited debates about historical and cultural naming conventions.
Mexican President Claudia Sheinbaum responded light-heartedly, suggesting that North America could be renamed ‘Mexican America’ in reference to an old regional map. Google, which has navigated other geopolitical naming controversies, cited its consistent approach, such as labelling disputed waters as ‘Sea of Japan (East Sea)’, ‘Israel (Palestine)’, or ‘Persian Gulf (Arabian Gulf)’ in different regions.
The renaming has sparked mixed reactions, with critics accusing it of unnecessary politicisation and cultural erasure. Google’s application of the changes reflects its policy of balancing local preferences and global clarity in its mapping platform.
Italian cybersecurity startup Exein has signed an agreement with Taiwan’s MediaTek to embed its security technology into the chipmaker’s Genio platform. The partnership will provide advanced security features for billions of chips used in mobile, home, automotive, and healthcare industries worldwide.
Exein expects its technology to be implemented in over 3 billion devices as a result of the deal. The partnership, valued at more than 5 million euros, is projected to double in worth by 2028. The company views MediaTek as a key strategic partner and sees this collaboration as a step towards expanding into automotive and robotics sectors globally.
Italy has been striving to foster a stronger tech startup ecosystem, and this agreement marks a significant milestone. Exein previously raised $15 million in Series B funding and counts major companies like Daikin, Seco, and Kontron among its clients.
The Chinese AI app DeepSeek was removed from Apple and Google app stores in Italy on Wednesday, following a request by the country’s data protection authority for information on its handling of personal data. Italy’s Garante regulator gave DeepSeek 20 days to clarify what data it collects, its sources, purposes, and whether it is stored in China. Concerns over safeguarding underage users, potential bias, and risks of electoral interference were also highlighted by Garante chief Pasquale Stanzione.
The app, which recently surpassed ChatGPT in downloads from Apple’s App Store, remains functional for Italian users who had already installed it. It is also still available in other European Union countries and the UK. Ireland‘s Data Protection Commission has also sought details about DeepSeek’s data processing practices for Irish users, while Germany‘s government has voiced concerns about potential AI-driven election interference ahead of its February vote.
Italy’s Garante is known for its proactive stance on AI regulations, having temporarily banned ChatGPT in 2023 over alleged breaches of EU privacy laws. DeepSeek, which touts itself as a cost-efficient alternative to U.S. AI services, has faced mounting scrutiny as it gains popularity. Meanwhile, Irish regulators noted that DeepSeek has not designated Ireland as its EU headquarters, complicating oversight under EU data protection rules.
Google has appealed to the EU’s top court to overturn a record 4.3-billion-euro antitrust fine imposed seven years ago, arguing that the penalty punished the company for its innovation. The fine was originally levied by the European Commission, which accused Google of using its Android operating system to suppress competition by forcing manufacturers to pre-install Google Search, Chrome, and the Google Play store on devices. While the fine was later reduced to 4.1 billion euros by a lower court, Google maintains that its actions fostered competition, not hindered it.
During Tuesday’s hearing, Google lawyer Alfonso Lamadrid stated that the Commission failed to meet its legal obligations and relied on errors in law. Lamadrid defended Google’s agreements with phone manufacturers, insisting they were not anti-competitive, but rather beneficial to the market. The case centres on whether the European Commission acted appropriately in its investigation and decision to reshape markets through such penalties.
The judges of the Luxembourg-based Court of Justice of the European Union will make a final ruling in the coming months, with no further opportunity for appeal. In addition to this case, Google remains under scrutiny by EU regulators for its advertising business, with another major decision expected later this year.
