Chinese artificial intelligence lab, DeepSeek, has achieved impressive results in AI model building by rethinking industry approaches, exposing the inefficiencies of major tech giants like OpenAI and Anthropic. DeepSeek's model matches or surpasses the performance of industry-leading models while using a fraction of the compute power and cost. Their breakthrough techniques include using 8-bit training, processing entire phrases instead of individual words, distillation to replicate larger models' outputs, and a mixture of experts approach for greater efficiency. The cost implications are significant, with DeepSeek charging significantly lower prices for API requests compared to competitors. DeepSeek's success has ignited a "race to the bottom" in pricing power and raised questions about the necessity of massive data centers and specialized hardware in AI development. This paradigm shift has impacted the stock market and may disrupt the competitive landscape of major tech companies in the AI sector.



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