2025 has just started, but already there is news shaking up the AI industry; On January 20, DeepSeek, a relatively unknown AI research lab from China, released an open-source model that’s quickly become the talk of the town.

AI Breakthroughs in 2025: What’s coming?

We’re at a point where extraordinary advances in Artificial Intelligence (AI) software have become regular happenstance. Innovations, such as OpenAI’s latest advancements or Google's Gemini 2.0, underscore the trends shaping AI in 2025. 

At this point, Meta seems to be the one lagging, with its latest Llama version, Llama 3.1 released in July 2024. 

The list goes on, but the Big Three are just the tip of the iceberg. Some more specific AI models, such as Nova Lite from AWS or Claude Haiku from Antrophic, are creating their own revolutions in their respective niches for data extraction and analysis.  

Yet, DeepSeek AI has captured the spotlight with its groundbreaking improvements and could become the next big player in the field. 

What is DeepSeek AI?

Developed during the last 2 years by quant hedge fund High-Flyer founder and AI researcher Liang Wenfeng, DeepSeek is an AI startup currently focused on large language models and reaching artificial general intelligence, or AGI - something which OpenAI and its rivals say they’re fast pursuing.

When Liang put together DeepSeek’s research team, he was not looking for experienced engineers to build a consumer-facing product. Instead, he focused on high-profile PhD students from China’s top universities, including Peking University and Tsinghua University, who were who lacked industry experience but were eager to prove themselves. 

“Unlike many Chinese AI firms that rely heavily on access to advanced hardware, DeepSeek has focused on maximizing software-driven resource optimization,” said University of Technology Sydney associate professor Marina Zhang. “DeepSeek has embraced open-source methods, pooling collective expertise and fostering collaborative innovation. This approach not only mitigates resource constraints but also accelerates the development of cutting-edge technologies, setting DeepSeek apart from more insular competitors.”

DeepSeek is still wholly owned by and funded by High-Flyer, according to analysts at Jefferies.

What’s All This DeepSeek Fuss About?

The buzz around DeepSeek began picking up steam earlier this month when the startup released R1, its reasoning model that rivals OpenAI’s o1. Today, it mostly stems from its remarkable achievements in cost reduction and efficiency breakthroughs.

Training Costs

By now, most people know about the astronomical costs associated with training new AI models. Training requires two primary resources: hardware and energy. Any improvement in these areas significantly impacts costs, acting as a barrier to entry for companies without massive capital.

Big players like OpenAI, Meta, and Google have invested $70 to $100 million for their latest models. Meanwhile, it costs just $5 million to train DeepSeek—a jaw-dropping 90% cost reduction. 

Moreover, DeepSeek achieved this result using inferior chips, challenging the dominance of hardware giants like Nvidia and Broadcom. Nvidia, in particular, owes its trillion-dollar valuation to AI’s explosive growth, but DeepSeek’s innovations could disrupt the hardware market.

Efficiency

DeepSeek is not just cheaper to train; it is also significantly more efficient. Competing directly with OpenAI’s most advanced models, DeepSeek delivers similar capabilities at a fraction of the cost. Traditionally, AI progress has been incremental, but DeepSeek represents a leap forward.

Tools for Developers

DeepSeek is not just an AI model; it’s a platform. Its flagship tool, Chat DeepSeek, resembles the popular ChatGPT, however, it offers eye-opening speed improvements. Users often experience delays with ChatGPT as it generates responses, but Chat DeepSeek is noticeably faster.

Additionally, DeepSeek is open-source, a decision that makes it a game-changer in AI technology. Most proprietary models, including OpenAI’s, are closed systems, restricting access to their inner workings. In contrast, DeepSeek’s open-source approach mirrors Meta’s commitment to open AI development.

Developers and enthusiasts can access the R1 pipeline on HuggingFace and the latest version (V3) on GitHub. This transparency invites collaboration and innovation across the community, paving the way for open-source AI tools to flourish.

DeepSeek Coder

DeepSeek has also introduced DeepSeek Coder (https://deepseekcoder.github.io/), a tool tailored for developers. While integration with popular coding assistants like Copilot is yet to be seen, this tool promises to lower costs for developers who currently pay $200+ for similar solutions.

The Future of AI Technology

The competition between AI giants like OpenAI, Meta, Google and now DeepSeek will undoubtedly reshape the industry. Current strategies are becoming obsolete as players race to adopt or counter DeepSeek’s advancements. AI-related stocks have already experienced turbulence following DeepSeek’s announcement, signaling significant shifts in market dynamics.

Rumors suggest DeepSeek’s achievements might involve leveraging advanced Nvidia chips, which could be good news for the AI community. If true, this technology could help others replicate or exceed DeepSeek’s results. Regardless, the focus will remain on improving efficiency and exploring alternative approaches to AI development.

DeepSeek AI’s disruptive entrance into the market highlights the rapid pace of AI efficiency breakthroughs and underscores the importance of cost-reduction innovations.

As geopolitics and technology intersect, China’s role in reshaping the AI landscape becomes ever more significant. From open-source AI tools to revolutionary training costs, DeepSeek is setting the stage for the next wave of artificial intelligence evolution.

More updates will follow as we witness this transformative era unfold.