The meteoric rise of Chinese startup DeepSeek has rattled Silicon Valley to its core. The company demonstrated that it’s possible to create top-tier AI at a tiny fraction of the cost of what outfits like OpenAI have been spending. By employing some clever tricks, DeepSeek says it squeezed a groundbreaking amount of performance out of a limited number of already obsolete Nvidia chips. The news sent a jolt down Wall Street, leading to a massive tech selloff that wiped out over $1 trillion in market capitalization — not to mention almost $100 billion in losses for tech billionaires. DeepSeek’s seemingly competent use of “distillation,” which is essentially training an AI on the output of another, has caught the attention of the AI industry, as the Wall Street Journal reports, sending a chill down the spines of tech leaders. The process effectively allows much smaller entities to rapidly train AI models at a tiny fraction of the cost, an awkward development given the ungodly sums that the likes of OpenAI have been pouring into their models. “It’s sort of like if you got a couple of hours to interview Einstein and you walk out being almost as knowledgeable as him in physics,” data management company Databricks CEO Ali Ghodsi told the WSJ. Before the emergence of DeepSeek, the modus operandi of AI companies had been to maximize the capabilities of AI models by maximizing the computing power behind them, a mind-bogglingly expensive endeavor that culminated in Trump announcing a half-trillion dollar…AI Companies Tremble as They Realize It's Easy for Competitors to Steal Their Super-Expensive Work for Pennies on the Dollar