Sudden emergence of DeepSeek may accelerate AI innovation in Silicon Valley, experts say
The sudden emergence of DeepSeek in the global artificial intelligence competition has sparked questions about its impact on Silicon Valley giants like Nvidia and fledgling startups across the Bay Area as well.
Olaf Groth teaches business and public policy at UC Berkeley. He regularly uses ChatGPT to help with research and structuring classes.
"It's not just a light for you but also everybody that you work for or with because you get better and smarter in a very demonstrable way," Groth told CBS News Bay Area.
Groth has written extensively about AI and the emerging tech-driven transformation of global organizations and economies.
DeepSeek's sudden emergence touted as a cheaper AI alternative tool, not dependent on expensive technology, wiped out almost $600 billion from Santa Clara-based chipmaker Nvidia's market value in one day.
"That is life in Silicon Valley and really in the AI innovation scene globally. Speed matters, and they just got out competed," said Groth.
According to Crunchbase, AI-related companies based in the Bay Area raised more than $27 billion in 2023, up from $14 billion in 2022, when the region's companies raised 29% of all AI funding.
Groth believes DeepSeek's impact on Silicon Valley, AI startups in San Francisco and beyond, will be a net positive.
"There is an overall acceleration of innovation to be expected," said Groth.
"It's not just going to be the strong getting stronger. You are going to have a lot more competition, but it's a lot more innovation. This is a fourth industrial revolution that's going to benefit more than just seven tech companies," said Dan Ives, managing director and senior equity research analyst at Wedbush Securities.
"It doesn't ruin or dent the AI revolution, no enterprise in the United States is calling DeepSeek when it comes to AI. It's Nvidia, Microsoft, Google, Amazon, and others," said Ives.
DeepSeek's open source model allows nonprofits, schools, and other agencies to build AI applications with smaller budgets.
It's an economically viable option that's quite different from generative AI chatbots like ChatGPT offered by San Francisco-based OpenAi.
"This is really what the open source community is all about. You put some code down there, a foundation model out there, that will induce others to build on it, with their own engineering, with their own innovations," said Groth.
That potential for more innovation has Groth and other analysts optimistic about the emergence of more AI companies.
"Because of the old patterns of globalization 1.0 over the past 30-40 years are coming apart. And there is a new order popping out, and it has a lot to do with AI data and compute technology," said Groth.
DeepSeek's introduction to the AI universe has many wondering what's to come next from the Bay Area and Silicon Valley.
Venture capitalist Marc Andreessen described the arrival of DeepSeek as a "Sputnik moment", a reference to the Soviet satellite launch in 1957 that highlighted a technology chasm between the U.S. and its main geopolitical adversary.
