China’s DeepSeek AI assistant becomes top free iPhone app as US tech stocks take a hit

Chinese AI assistant DeepSeek has become the top rated free app on Apple's App Store in the US and elsewhere, beating out ChatGPT and other rivals. It's powered by the open-source DeepSeek V3 model, which reportedly requires far less computing power than competitors and was developed for under $6 million, according to (disputed) claims by the company. At the same time, it offers performance that's on par with Claude-3.5, GPT-4o and other rivals, DeepSeek said last week.

The news that DeepSeek topped the App Store charts caused a sharp drop in tech stocks like NVIDIA and ASML this morning. Google parent company Alphabet and Microsoft were also down this morning. As the New York Times notes, the overall Nasdaq and S&P 500 dropped as well, and markets in Europe and Japan also took a bit of a hit. 

Available on web, app and API, DeepSeek is similar to AI Assistant like ChatGPT with features like coding content creation and research. Its first DeepSeek-R1 release is available under an MIT license, so it can be used commercially and without restrictions. 

The company is headquartered in Hangzhou, China and was founded in 2023 by Liang Wenfeng, who also launched the hedge fund backing DeepSeek. To develop the tech, he reportedly stockpiled NVIDIA A100 chips prior to the US export ban and paired those with less powerful chips that can still be imported, according to MIT Technology Review. 

However, DeepSeek was still at a significant hardware disadvantage next to rival models from OpenAI, Google and others. That forced the company to be more efficient with its AI models, and it has supposedly been able to build and train them at a far lower cost than previously thought possible. 

Analysts from Citi and elsewhere have questioned those claims, though, and pointed out that China is a "more restrictive environment" for AI development than the US. Still, the rise of DeepSeek has raised concerns about the potential profits of rivals like OpenAI that have already invested billions in AI infrastructure.

All the attention today around DeepSeek appears to have attracted some bad actors, though. According to CNBC, DeepSeek says it is temporarily limiting registrations for the service in light of "large-scale malicious attacks." Existing users should be able to log in as usual, however. But if all the buzz around the tool made you want to check it out, you might have to be patient. 

Update, January 27 2025, 11:47AM ET: This story has been updated with details on the cyber-attack on DeepSeek that has limited registrations for the service.

Update, January 27 2025, 11:27AM ET: This story and its headline were updated with more details on the stock price drops that appear to have hit this morning in conjunction with the news around DeepSeek.

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