The Big Story 

The rise in popularity of a high performing and cheaply built Chinese artificial intelligence (AI) model has shaken the confidence of investors and raised larger questions about the future of American-made AI.

© Getty Images

DeepSeek’s new AI model has taken the internet by storm, sparking a significant sell-off in the tech sector as investors fear the billions of dollars U.S. firms have invested into AI infrastructure may be unnecessary. 

“It upends the way that investors have thought about how AI needed to be developed and implemented,” said Steve Sosnick, chief strategist at Interactive Brokers, who suggested the industry might be at an “inflection point.” 

After launching its latest AI model, R1, last week, DeepSeek surged to the top of Apple’s App Store over the weekend. The application was the No. 1 free app on the store on Monday, while ChatGPT-maker OpenAI sat at the No. 2 spot.  

DeepSeek claims its R1 open-source reasoning model has a “performance on par with” OpenAI, which is regarded as one of the U.S.’s leading AI reasoning models.  

The company, founded in May 2023, claims to have spent just $5.6 million to train its latest models, The Wall Street Journal first reported. 

The price tag pales compared to leading U.S. AI firms like OpenAI, Meta or Google, all of which have spent billions of dollars in recent years on AI infrastructure and development of large language models.  

A significant chunk of AI developers’ expenses in the U.S. goes to infrastructure, including the data centers and chips used to power the AI training process.  

Now, DeepSeek is disrupting the market and showing how AI can be developed at a fraction of the price, while allegedly not relying on the vast data sets, chips and infrastructure thought to be the holy grail of AI development.  

Read more in a full report at TheHill.com.

Welcome to The Hill’s Technology newsletter, we’re Julia Shapero and Miranda Nazzaro — tracking the latest moves from Capitol Hill to Silicon Valley.

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Essential Reads 

How policy will be impacting the tech sector now and in the future:

Tech stocks drop amid rise of China’s DeepSeek AI model

What is DeepSeek, the AI model taking the internet by storm?

Pentagon looks to leverage AI in fight against drones

Crypto Corner 

Why crypto ‘debanking’ is in House GOP’s crosshairs

© AP

Welcome to Crypto Corner, a new feature in The Hill’s Technology newsletter focused on digital curency and its outlook in Washington.

The alleged “debanking” of cryptocurrency firms has become an increasingly popular target for House Republicans.

House Oversight Committee Chair James Comer (R-Ky.) revealed Friday that he was investigating crypto debanking, and both the Senate Banking Committee and the House Financial Services Committee teed up hearings on the topic for next week. 

Debanking — the closure of bank accounts that financial institutions consider risky, often with little or no notice — has long been a concern on the right.

Trump brought renewed attention to the issue Thursday during a virtual appearance at the World Economic Forum, where he accused banks of refusing to do business with conservatives.

“I hope you’re going to open your banks to conservatives, because what you’re doing is wrong,” the president said to Bank of America CEO Brian Moynihan.

This coincides with the crypto industry’s outspoken frustration with debanking, as well as its growing alliance with Trump and the GOP.

The president, who vowed to make the U.S. “the crypto capital of the planet,” has nominated numerous crypto-friendly candidates to his Cabinet and signed an executive order last week establishing a digital assets working group.

PLUS: While crypto stocks surged in the weeks and months following Trump’s reelection, Bitcoin hit an 11-day low on Monday amid DeepSeek’s surge in popularity.

Bitcoin had issues making gains last week, suggesting a possible end to the postelection rally despite the continued excitement among industry insiders.

While Trump did issue a crypto executive order his first week in office, some investors were disappointed it didn’t happen on his first day in the Oval Office.

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