DeepSeek surpasses ChatGPT on App Store as Chinese AI startup sends shockwaves through tech stocks

Chinese AI startup DeepSeek has overtaken ChatGPT to become the highest-rated free app on Apple’s App Store in the U.S. This achievement comes just weeks after its January 10 launch, fueled by the growing popularity of the DeepSeek-R1 AI model.

The buzz around DeepSeek grew after CNBC first reported that its V3 model had outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o, and Alibaba’s Qwen 2.5 on third-party benchmarks—all at a significantly lower cost.

The news sent shockwaves through global technology stocks on Monday, igniting concerns about America’s competitive edge in technology, according to Bloomberg reporters Abhishek Vishnoi, Winnie Hsu, and Jan-Patrick Barnert.

“Chinese startup DeepSeek’s AI Assistant on Monday overtook rival ChatGPT to become the top-rated free application available on Apple’s App Store in the United States,” Reuters reported.

Chinese AI startup DeepSeek overtakes ChatGPT on Apple App Store

The startup revealed it spent just $5.6 million on training the model, a stark contrast to the billions typically invested by its competitors. DeepSeek-R1 made waves last week for its ability to rival OpenAI’s O1 model while operating on a significantly smaller budget.

What makes this achievement even more notable is that DeepSeek managed to achieve these results despite operating under U.S. export restrictions on advanced chips, demonstrating its ability to innovate within tight resource constraints.

DeepSeek researchers claim they trained their models using Nvidia’s H800 chips, a less advanced alternative to the restricted H100 chips. This has sparked discussions among U.S. tech leaders about whether current export controls are effectively limiting China’s AI progress.

Shaking Up the AI Race

DeepSeek’s rise has sparked debates across Silicon Valley and global markets. Marc Andreessen, a venture capitalist, described the achievement as “one of the most amazing and impressive breakthroughs I’ve ever seen.” At the same time, journalist Holger Zschaepitz suggested that DeepSeek could challenge the billions being invested in the AI industry by showing that world-class results can be achieved on a much smaller budget.

Others see this development as a potential opportunity. Y Combinator CEO Garry Tan believes that cheaper AI training could ultimately benefit the industry. He shared, “If training models get cheaper faster and easier, the demand for inference (actual real-world use of AI) will grow and accelerate even faster.”

Not everyone is convinced. Curai CEO Neal Khosla offered a more skeptical take, calling the company’s efficiency claims into question. While no evidence has been presented to back these doubts, the skepticism highlights the growing tensions between U.S. and Chinese AI players.

The Bigger Picture

DeepSeek’s success also highlights the growing competitiveness of China’s AI sector. Founded in Hangzhou in 2023, DeepSeek emerged amidst a surge of innovation in the region, joining a wave of companies racing to develop AI models. While many have released their own tools, DeepSeek stands out as the first to earn recognition from the U.S. tech industry for matching or surpassing the performance of leading American models.

What This Means for AI

DeepSeek’s climb to the top of the App Store underscores a shifting dynamic in global AI competition. If startups can achieve major breakthroughs without access to the most advanced resources, it raises questions about how the industry will evolve. With DeepSeek now at the center of the conversation, the AI race is becoming more unpredictable—and much more interesting.

Industry Reactions

American tech CEOs are already sounding the alarm bell on China’s AI breakthroughs. At the World Economic Forum in Davos, prominent CEOs raised concerns about China’s rapid progress in AI. DeepSeek was a frequent topic of discussion, with several leaders emphasizing the potential geopolitical risks of losing ground in this critical technology.

“If the United States can’t lead in this technology, we’re going to be in a very bad place geopolitically,” one CEO warned. Their comments highlight the growing stakes for U.S. leadership in AI, a field increasingly tied to national security and global influence.

Prominent figures have weighed in on DeepSeek’s achievements:

• Marc Andreessen, a venture capitalist, called it “one of the most amazing and impressive breakthroughs I’ve ever seen.”
• Holger Zschaepitz, a journalist, suggested that DeepSeek’s efficiency could pose a significant threat to U.S. equity markets, undermining the utility of billions spent on capital expenditures in AI.
• Garry Tan, CEO of Y Combinator, viewed the development as an opportunity for U.S. competitors, noting that cheaper model training could accelerate the demand for AI inference and real-world applications.