China-based DeepSeek’s artificial intelligence model has shaken the sector by offering high performance apparently at a fraction of the cost of those developed by US giants, with many experts saying the release also hints at opportunity for investment minnow Europe.
DeepSeek’s large language model (LLM) is “making a mockery of the (idea that) we need a trillion dollars to train the next level of AGI”, or artificial general intelligence, said Neil Lawrence, machine learning professor at Britain’s University of Cambridge.
He was referring to the US announcement last week of a pharaonic “Stargate” program to build $500 billion worth of AI infrastructure, a plan led by ChatGPT creator OpenAI.
Largely destined to be pumped into data centers packed with the latest AI chips, the scale of the sums underscored that almost no European firm can access the resources to compete at the cutting edge.
But DeepSeek’s claim that it succeeded in producing a model with similar capabilities to OpenAI’s for just $5.6 million has upended those certainties.
The technology promised “models that are more efficient and less hungry for GPUs [graphic processing units], for energy and for cash,” Laurent Daudet, chief executive of French generative AI company LightOn, told AFP.
“It’s interesting for Europe to see that we don’t need a Stargate project to do something interesting… to innovate, you don’t need $500 billion,” he said.
The shock has battered AI-related tech stocks in recent days, including key chipmaker Nvidia.
“It shows that competition is very, very strong and that there’ll be a price war too,” said Nicolas Gaudemet, AI chief at the consulting firm Onepoint.
“An additional provider will bring prices down,” he predicted.
Open source
Cambridge professor Lawrence said it was a “tragedy” that DeepSeek had not emerged from Europe’s deep reserves of AI talent in both academia and business.
But he added that DeepSeek’s “small change in the recipe” was just “a glimpse of the innovation” ahead.
“It is very encouraging for Europe… there will be more than one DeepSeek,” he said.
Lawrence singled out for praise DeepSeek’s open-source methodology, under which the developers exposed the guts of their project to the wider AI community, which can then build further on it.
That was good news for European contenders such as France’s Mistral, Gaudemet said.
“They can reuse (DeepSeek’s models) to train up theirs and stay in the race,” he said, though “they’ll have to be very good, because the competition isn’t just between the US and Europe—China is showing that it’s capable”.
Jonas Andrulis, CEO of German AI firm Aleph Alpha, told AFP his company was already offering DeepSeek’s capabilities to clients.
But he added that he had long expected such models to “become a commodity”.
“We have to drive meaningful innovation beyond ‘Hey, those guys also did an LLM’,” Andrulis said.
‘Card to play’
Cheaper AI could mean more tools adapted for local markets and individual businesses rather than a massively resourced and centralised model.
“There is a future for more frugal models that can perform just as well, especially for business needs,” LightOn’s Daudet said.
He described his company’s role as building the “chassis” of a usable vehicle around the “motor” of an AI model—”how a business can use it in a totally secure, personalisable way, with all the guarantees they want”.
“There’s obviously a card to be played for (European) companies, which is security, the aspect of ‘your data will stay in Europe’ and be handled by people whose interests are… in Europe,” Onepoint’s Gaudemet said.
“A lot of countries in the world that are not the US or China feel a little bit uneasy to accept full-on dependencies to one of those two power blocs,” said Andrulis.
“This is a valid strategy to basically be the collaborative, fair, open third way that’s not trying to strong-arm you in one way or the other.”
Europe has “some of the strongest researchers in the world and bottom-up, we understand where those strengths are”, Lawrence said.
“We don’t need massive amounts of investment, but we do need people who are listening to people in their own countries and their own continent… not having their heads turned by whatever (OpenAI chief) Sam Altman’s latest narrative is,” he added.
© 2025 AFP
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DeepSeek shock shows Europe not out of AI race: experts (2025, January 28)
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