Nvidia, Sam Altman, and Satya Nadella React to China’s DeepSeek R1 AI Model

The recent launch of the very competitive and potentially disruptive R1 AI model by Chinese startup DeepSeek is continuing to make headlines this week. The news of DeepSeek-R1 possibly performing similarly to OpenAI’s o1 model at a fraction of the cost already impacted stock markets in a pretty big way yesterday, and this is likely not over.

As it turns out, the unexpected appearance of this new AI competitor from China is forcing AI tech leaders to speak up to reassure investors. Sam Altman, the CEO of OpenAI posted on X today that DeepSeek R1 is “an impressive model, particularly around what they’re able to deliver for the price.”

The exed added that the company “will obviously deliver much better models” and “pull up some releases.” Additionally, Altman emphasized that OpenAI’s current strategy, which will require billions of dollars of investments into cloud resources is the right path forward. “We are excited to continue to execute on our research roadmap and believe more compute is more important now than ever before to succeed at our mission,” Altman wrote.

but mostly we are excited to continue to execute on our research roadmap and believe more compute is more important now than ever before to succeed at our mission.

the world is going to want to use a LOT of ai, and really be quite amazed by the next gen models coming.

— Sam Altman (@sama) January 28, 2025

Microsoft CEO Satya Nadella reacted to the news of DeepSync’s new AI model with a reference to the Jevons paradox, an economic science concept explaining why an increase in efficiency ultimately leads to an increase in consumption. “As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of,” Nadella posted on X yesterday.

Jevons paradox strikes again! As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of. https://t.co/omEcOPhdIz

— Satya Nadella (@satyanadella) January 27, 2025

Last week, Microsoft announced some important changes to its multi-year partnership with OpenAI: While the software giant will continue to use OpenAI models to develop its own AI offerings, Microsoft is no longer OpenAI’s exclusive cloud provider. The AI startup is now free to purchase more cloud capacity from other cloud providers as Microsoft now has a “right of first refusal.”

OpenAI is set to be the main beneficiary of Project Stargate, a $500 billion artificial intelligence infrastructure project backed by SoftBank, Oracle, and MGX. Microsoft, however, plans to spend a massive $80 billion in its current fiscal year on AI datacenters.

Nvidia, which continues to dominate the market for costly AI chips used for training and deploying AI models, also tried to dismiss concerns about DeepSeek threatening its business model. “DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling,” an Nvidia spokesperson told CNBC yesterday. “DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant.”

While DeepSeek quickly climbed up to the top of the US App Store charts this week, it’s probably time to take a step back and look at how this new AI model really works. Paul previously reported yesterday that the Chinese chatbot won’t answer sensitive questions about China, but there are now growing concerns about data safety as well. As pointed out by Wired, the DeepSeek Privacy Policy explicitly states “We store the information we collect in secure servers located in the People’s Republic of China.”