Could DeepSeek Accelerate The Age Of AI Transformation?

This week, a Chinese firm unveiled DeepSeek, a new competitor to AI platforms such as ChatGPT, Claude, and Perplexity. This technology has the potential of bringing more people into world of AI and expanding the transformative power of AI to a broader audience. An excellent article in Forbes discusses its significance and implications.

I began my career at the beginning of the digital revolution, when PCs were introduced and democratized the age of information.

At the center of this was something called the digital transformation. Computers, networks, and new innovative technologies have helped us move from an analog world to one that is almost entirely digital in the last 45-50 years.

Although there are still areas in the world where analog technology is central to the way of life, even these areas are getting wireless networks and smartphones, quickly moving them towards an eventual digital world.

However, in the rapidly evolving tech landscape of 2025, we're witnessing a seismic shift in how businesses approach digital innovation. The era of "digital transformation" is behind us—it's now a given that companies have embraced digital technologies. Today's real challenge is harnessing generative AI's power while safeguarding critical data.

As we look ahead, AI integration will undoubtedly be the top priority for businesses in 2025 and beyond.

Balancing AI's role in all aspects of business, education, and even consumer markets with solid security will be key to seeing AI transformation take hold and drive AI into all aspects of our business and culture, as digital has done in the past.

When DeepSeek was introduced on Monday, January 27, 2025, it initially caused Nvidia, Microsoft, and other AI giants to lose value in the stock market. But by Tuesday, January 28, 2025, we saw many tech stocks that lost money recover some of the previous day's losses.

There is one short but solid tutorial on YouTube from a former Microsoft engineer, Dave Plummer, who explains what DeepSeek is and its impact on the market. It is worth your time to watch it.

But in all the news surrounding DeepSeek and its future and impact on the market, many missed a few things.

First, the market dinged Nvidia since their higher-end processors are used to create high-speed AI server farms. However, those chips are costly, and Nvidia sells them in the tens of thousands, which is why their market value has skyrocketed. However, DeepSeek uses Nvidia's H100 chip and if it works as suggested, Nvidia could end up selling tens of millions of H100s all over the world each year.

That means Nvidia will still make a lot of money, even from their lower-end chips. At the moment, the H100 has no restrictions, so it can be sold to China or anyone in any country who wants to use it to create their own AI solutions.

Second, former Intel CEO Pat Gelsinger posted on LinkedIn another perspective that I consider quite important to driving the new era of AI transformation.

Mr. Gelsinger wrote -

"Open wins. It has been disappointing to watch the foundational model research become more and more closed over the last few years. In this, I'm more aligned with Elon than Sam – we really want, nay need AI research to increase its openness. We need to know what the training datasets are, study the algorithms and introspect on correctness, ethics and implications. Having seen the power of Linux, Gcc, USB, Wifi and numerous other examples has made this clear to all students of computing history. Fighting the battles of legal, spectrum, engineering and adoption – open is never easy and consistently challenged by market forces. Open wins every time it is given a proper shot.

AI is much too important for our future to allow a closed ecosystem to emerge as the one and only in this space. DeepSeek is an incredible piece of engineering that will usher in greater adoption of AI and help reset the industry's view of open innovation. It took a highly constrained team from China to remind us all of these fundamental lessons of computing history."

I agree with Mr. Gelsinger. DeepSeek created a much lower-cost backend system to create its R1 competitor to ChatGPT, Claude, etc. But that is only half the story. Its code, being open-sourced, can now run on less powerful back ends that are one tenth the cost of running today's AI models, which could drive adoption much faster for creating dedicated agents for businesses, education, and consumer solutions.

While DeepSeek code may never be as powerful as ChatGPT or other closed systems, it instead is, in a way, democratizing AI so that companies can use it for dedicated agents to meet specific needs. Think of it as a tool for developing and creating dedicated task agents at very low costs instead of creating whole company agents that big companies use with the current AI closed systems today.

There are still unanswered questions about DeepSeek's business model, its roadmap for the future, and the potential for China to add new regulations and/or censorship on how it is used in China or even outside of China.

But at the moment, its open-source model, which can be downloaded and used locally on less powerful PCs and servers, makes it a potential tool for putting AI agents and solutions in the hands and control of millions of new companies and people around the world.

DeepSeek's hardware approach is a game changer in that it can deliver similar results that can be as powerful as today's LLM providers. However, its ability to provide open-source code that can run on much lower-cost systems suggests that we could be moving much faster from our digital world to an AI-powered world sooner than many expected.

Disclosure: Nvidia, Intel and Microsoft subscribe to Creative Strategies research reports along with many other high tech companies around the world.