DeepSeek vs OpenAI: Last Man Standing

SGH Wealth Management’s “Read What I’m Reading” Feb. 2025 | Feb. 18th, 2025

Do the deep recesses of your brain remember the search engines: Lycos, AltaVista, or WebCrawler? If not, it’s probably because the 26th search engine to hit the market dominated… its name was Google.

In a striking reminder that first to market doesn’t guarantee success, even if you knew that search engines would make for a great investment, 25 of them went belly up before the real opportunity emerged. Enter DeepSeek the newest addition to the AI Industry, sending Nvidia down (-17%) on its arrival when tech experts (and analysts who talk with them) realized that AI services can be offered without the need for massive raw computing power—the kind of chips that Nvidia specializes in.

What is DeepSeek and why did it send shockwaves through the AI community?

The short answer is that the Chinese engineers arrived at a more efficient way to manipulate the fantastic amount of information and computer processing power necessary for AI to operate. Instead of using one massive system trying to know everything about everything, DeepSeek broke up its analytical engine into AI specialists—known to techies as ‘inference time computing.’ While traditional models like GPT-4 use 1.8 trillion calculations at every moment, answering every query and request all at once, DeepSeek only has to expend 37 billion at a time, each focused on a set of queries. The specialists can be trained far more cheaply, they are twice as fast and use 75% less memory.

Put in dollar terms, DeepSeek has 200 employees, vs. 4,500 at OpenAI. DeepSeek was developed for roughly $5 million, compared with the $6.6 billion capital raise for OpenAI.

Though DeepSeek is not the end of the AI boom nor is OpenAI or Nvidia, as there is much to learn before crowning the next “Google”. Already, Alibaba has announced a similar model; its 2.5-Max AI model, with an array of specialists, claims to be faster and more efficient than DeepSeek.

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