The global artificial intelligence (AI) landscape has witnessed a new shift with the emergence of China’s DeepSeek, a powerful AI model developed to counterbalance American AI giants like OpenAI, Google, and Meta. The release of DeepSeek sent shockwaves through the stock market, causing NVIDIA, one of the biggest players in AI hardware, to lose nearly $500 billion in market capitalization overnight. The tremors from this event are still being felt, and it has reignited debates on AI valuations, market speculation, and the role of opensource AI models in reshaping technological dominance. DeepSeek’s arrival signifies China’s renewed push to challenge American tech supremacy.

Unlike the walled-off approach of OpenAI, which requires massive computational resources and exclusive partnerships, DeepSeek claims to be open-source and highly efficient, requiring significantly lower costs for training AI models. This has raised eyebrows in the tech world, especially since China’s AI developments are often seen as state-backed projects aimed at global tech disruption rather than pure innovation. The market turbulence following DeepSeek’s debut also revealed the fragility of AI valuations. While the hype around AI companies has led to sky-high valuations, real-world market corrections have exposed the speculative nature of these figures. The old investment adage holds true – valuation is not a story crafted by analysts but a function of tangible cash flows and sustainable yield. Investors who blindly jump into AI stocks based on YouTube hype or social media narratives risk facing the brutal reality of market corrections.

Advertisement

DeepSeek is not the only major AI development emerging from China. Alibaba has recently unveiled an AI model that it claims surpasses DeepSeek, further intensifying the competition among China’s tech giants. Alibaba’s latest AI endeavor aims to outpace its domestic rivals and establish itself as a global AI powerhouse. While details of its model’s capabilities are still emerging, its impact on the AI industry is undeniable. Alibaba’s move could redefine the AI race, providing China with multiple competing AI entities rather than a single dominant player.

Despite these advancements, China faces significant roadblocks in its quest for AI dominance. Unlike the United States, which fosters innovation in an open, capitalistic environment, China’s tech sector operates under state supervision, limiting the organic development of disruptive technologies. Historically, AI breakthroughs have thrived in free societies where data, research, and innovation flow without restrictions. This is where American AI firms, despite occasional regulatory challenges, maintain an edge over their Chinese counterparts. The limitations of China’s AI ambition become evident when one scrutinizes its political and cultural rigidity. AI development is as much about access to data and computational power as it is about intellectual freedom. A controlled society with heavy censorship struggles to innovate beyond state-approved narratives. The past has proven that nations that stifle open discourse ultimately fall behind in technological races. A look at Soviet-era technological advancements in space and military technology illustrates how statecontrolled science eventually hit a ceiling, unable to keep pace with democratic, innovation-driven economies.

Another fundamental concern regarding China’s AI growth is trust. Open-source AI models, while theoretically accessible to all, come with risks when backed by an authoritarian regime. A major question that arises is whether models like DeepSeek will allow unbiased access to information. Would DeepSeek truthfully answer politically sensitive questions, such as those related to Taiwan, Tibet, or the Tiananmen Square massacre? Historical patterns suggest that AI models developed under state influence will inevitably serve the regime’s interests rather than promote free knowledge.

Interestingly, while DeepSeek and Alibaba’s AI models have stirred global interest, they still rely heavily on NVIDIA chips. The irony of this situation cannot be ignored – China’s AI ambitions continue to be dependent on American hardware, exposing its vulnerability in the global AI supply chain. Until China develops its own semiconductor ecosystem that can rival NVIDIA’s dominance, its AI push remains partially reliant on American technology. The battle for AI supremacy is not just about building better models; it is about creating ecosystems that foster continuous innovation. China’s latest AI developments may disrupt short-term market trends, but in the long run, open societies that encourage innovation, freedom, and transparency will continue to lead. The world watches as China pushes its AI boundaries, but history suggests that true technological revolutions thrive where ideas and competition flourish without stateimposed limitations.

(The writer is Associate Professor, Centre For South Asian Studies, Pondicherry Central University.)